In a clarification, HDFC Bank told the RBI that since it could not get details from seven complainants out of 12, it could not resolve their grievances. However, one of the complainant left out by HDFC Bank spent Rs36 for over 15 days by making two visits to the Branch and 15 calls to retrieve his eight paisa
In April, Moneylife wrote about how customers of HDFC Bank were being harassed with its new know your customer (KYC) norms. Several people shared their experiences with us. Moneylife followed up with HDFC Bank and the Reserve Bank of India. Taking cognisance of the issue, RBI issued a notice to HDFC Bank seeking clarification. The Bank sent its reply to the RBI, however, stated that it could not get details from seven customers out of 12, including Avinash Murkute and hence, was not able to resolve these customers’ problems.
Mr Murkute says, “It is shocking that the signatory to clarification letter from HDFC Bank (to the Reserve Bank of India- RBI) has mentioned that I have not provided account details. How and why one shall provide his account numbers of closed accounts? One Madhurima Manmohandas of HDFC Bank did write and ordered me in June 2013, to provide my account number within seven days. If it had been a polite request, I would have responded to her in equally polite manner. This demonstrated how serious HDFC was in responding to the RBI. When they (HDFC Bank) cannot read letters by speed post and require 15 days to refund 8 paisa, why should one respond to the order from HDFC Bank?”
Here is the first person account from Mr Murkute about his dealings with HDFC Bank…
I have abandoned and deserted HDFC Bank and included them in the list of defaulter’s as they still owe me Rs36.00 towards cost of recovering 0.8 paisa from the Bank in a case where cheque was deposited of RsXXXXX.08 and credit was given of RsXXXXX.00 only. This was violation banking double entry accounting mechanism and provisions. The Bank and its Kothrud, Pune branch and branch manager took 15 days and two personal visits by me and 15 phone calls to their centre of excellence and state of the art customer (harassment) call centre and equally harassing grievance resolution nodal officers and appellate authority to credit the eight paisa in my account.
I have closed all my four accounts including demat account way back in 2009 and I have obtained closure confirmation letter of each account. For closure of demat account, they made me oscillate from one office to another like Bank, Branch, HDFC Securities and so on. What was given in writing by HDFC Bank’s corporate office was not acceptable to branches. What is more interesting that even the vice president of HDFC Bank for depository operations, named R Venugopalan (my record reference No.339/HDFC/ Depository Date: May 26, 2009) doesn't read and respond to written communications.
Many times, they refused to print entries in my passbook on flimsy grounds. At times, they insisted that new account should be opened through agents only.
In spite of my number 9********9 is included in do-not-disturb (DND) list, HDFC keeps calling me several times for opening demat account, deposit account, car loans, home loans Every time protest was lodged with HDFC’s corporate office and every time they replied that this will not happen again but (the calls) still continuing. Every time they advise me register separately with each office and each branch of HDFC. This is in violation of national DND which HDFC never respected.
Once HDFC Bank gave me a double credit of Rs160 due to human error. I was quick to point this to them, and then they adjusted this additional credit of Rs160 by debiting from my account. HDFC Bank should learn this sense of urgency and honesty and its training managers should try to impart to its senior management so that ground realities can improve.
In the year 2009, I could have eaten six Vada pavs and HDFC Bank have deprived of my six vada pavs ( Rs36.00) and the chief managing director of the Bank should be made to understood this agony. If RBI would like a written complaint and / or more information, they can take this as feedback for the same. Everybody gets a chance to be equal.
During the last quarter of FY13, public sector banks wrote off Rs14,549 crore as loans and recovered Rs16,464 core from assets that turned bad
Public sector banks (PSB) or state-run lenders wrote off Rs14,549 crore as loans, while recovering Rs16,464 crore from assets that turned bad during the March quarter.
In a written reply in Lok Sabha, minister of state for finance Namo Narain Meena said, “Banks resort to write off only after exhausting all other possible avenues for recovery or when the asset coverage is not enough”.
He further said that banks are required to adhere to Reserve Bank of India (RBI) guidelines on write offs as well its board approved policy.
“The banks should either make full provision as per the guidelines or write-off such advances and claim such tax benefits as are applicable,” the minister said.
In reply to a separate question on long term capital need of the banks, the Minister said that the government is considering setting up a holding company to meet these requirements.
“To meet the long-term needs of capital of PSBs, the government in consultation with Reserve Bank of India, is considering formation of holding company.
The matter is under consultation with Department of Legal Affairs and Legislative Department,” Meena said.
The public sector banks need capitalisation to meet their enhanced lending, which is increasing every year. This fiscal, the government has made provisions of Rs14,000 crore for bank recapitalisation.
Canara Bank sanctioned education loan of Rs15 lakh and after the borrower completed his course, told him that it can sanction only Rs10 lakh. The borrower was made to pay interest on Rs5 lakh as the Bank termed it as overdraft
A general perception is that a public sector unit (PSU) bank would work by the book and would be less aggressive in penalising its good, regular customer. However Canara Bank in Mumbai has done just the opposite by blatantly charging clean overdraft rate of interest on an education loan. All this due to the mistake of the sanctioning authority.
On 9 April 2009, Canara Bank sanctioned an Education loan of Rs15 lakh to Parag Punjwani for pursuing post-graduate (PG) programme in management at International School of Business (ISB), Hyderabad. Full disbursal of the loan was done and Parag completed the course in April 2010.
Suddenly in June 2010, the Bank informed him that a loan of Rs15 lakh was not possible as the ceiling for education loan to study in India is only Rs10 lakh. The Bank then applied an interest rate of 9.75% for Rs10 lakh as education loan and 14.75% (applicable to over-draft facility) for the remaining Rs5 lakh of the sanctioned loan amount.
Over the next three years endless letters, requests, pleas and follow-ups with the bank by Parag continued, without any success.
This looks like a clear case of error on part of the Bank official/s that sanctioned the education loan or Rs15 lakh without knowing if there could be any ceiling limit.
If Parag was told of this limit at the outset, he would have arranged for the shortfall from other sources. But as a result of this mistake, he was being penalised and forced to pay excess interest at the rate of 5% on outstanding amount of over Rs10 lakh. All this while, he was paying regularly his equated monthly instalments (EMIs) without any delays or disruption.
Finally, in April 2013, out of frustration on the issue being dragged on for so long, Parag filed a formal complaint before the Bank's Complaint redressal cell and later to the Banking Ombudsman.
Thereafter, the Bank agreed to refund all excess interest. Parag received this message over a telephone call from the Bank's Head Office (HO). Nothing in writing was issued either by the HO or by the Bank. The branch (from where Parag borrowed the money) said that it would refund Rs31,960 which was due as per their calculations. However the actual refunds were in excess of Rs80,000.
In the last week of July 2013, Parag was asked (by the Bank) to submit detailed calculations of the refund amount. He informed the bank that the excess amount deducted was Rs80,696. In August 2013, the amount of Rs80,696 was refunded into the loan account of Parag. It was a huge relief to the customer who felt harassed and victimised for no fault of his. Only his conviction saw him through this trauma and he was able to take on the might and muscle power of a large PSU bank.
There are a few issues, which can be highlighted and learnt from this incident:
1) Customers should read all communication from the bank carefully. Do not tear away/ destroy communications before reading through. It could be levy of extra charges or hike in interest rates.
2) Do not believe that the Bank deals with numbers and is fully automated, so will be always correct. Empower yourself with the knowledge of basic banking rules, interest calculation methods, look for extra debits of charges in the account statement and do not hesitate to ask for explanation from your Banker.
3) While taking up a controversial issue with your Banker, do not continue talking to them on phone or meeting them. Create a trail by way of letters and emails, which will come in handy at a later date. Even after a meeting, drop them an email mentioning the face-to-face discussions held.
4) The last resort help is by way of Consumer Redressal Forums and Banking Ombudsman. They have certain processes and time frames, which need to be followed. It would be helpful to know such details and abide by them, when writing to such authorities.
5) Give wide publicity to such incidents so that more people are aware of how Banks and Financial Institutions fleece innocent customers - sometimes to line their own pockets and sometimes to save their own skin.