Consumer Issues
“Get More Customer-friendly”, says Rajan

At last, the RBI governor is nudging Indian banks in the right direction

For the first time after taking over as the RBI governor, Dr Raghuram Rajan has made a strong pitch for a more level playing field for bank customers. His first credit policy statement for FY2014-15 specifically mentions several vexed issues that banks have ignored for years.
    On failure to maintain average quarterly balances, he has asked banks to cut their services to the bare minimum instead of levying penalties. He has also frowned upon such penalties imposed on inoperative bank accounts.
   The governor has said that there should be no charge on pre-payment of any floating rate term loans.
    He has also asked banks to limit customer liability in case of losses due to hacking and phishing, unless they can prove deliberate customer negligence.

Reserve Bank of India (RBI) has indicated that if banks fail to get the hint, it will issue directives to make them fall in line. All this is very welcome, indeed, but it doesn’t even begin to touch the areas that cause serious losses or harassment to customers.

Our Cover Story this time documents several examples of how the tardiness of banks with regard to deducting and crediting tax deduction at source (TDS) is causing immense grief to consumers, including senior citizens. RBI has repeatedly exhorted banks to be more diligent in this regard, but it has had little impact. A better solution would be for Dr Rajan to impress on the finance ministry and on the income-tax department, under the new government, to find a permanent solution to the TDS issue.

The governor also needs to act quickly to expand the role of the banking ombudsman to make it more relevant. There is a litany of complaints against some of the biggest banks, especially State Bank of India, about gross mis-selling of insurance products. We have specific examples of bank managers coercing small entrepreneurs into taking insurance as a condition for disbursing loans, because of incentives and goodies, such as foreign junkets, offered by insurers.

The Hong Kong & Shanghai Bank’s (HSBC’s) dubious destruction of actress Suchitra Krishnamoorthi’s wealth is already well documented by Moneylife. Although RBI played a big role in pushing HSBC to settle the case, Dr Rajan, who has spent long years in the US, would surely realise that the end result is hardly a deterrent to the Bank. Although the settlement seems large (just under Rs1.4 crore), it did not even cover her losses, interest lost, costs incurred in battling the Bank through multiple regulators and compensation for hardship and mental anguish.

Worse, HSBC can continue to ignore other victims. Even in Ms Krishnamoorthi case, where Moneylife Foundation helped her fight, she says, “I had reached almost a dead end till I approached you (Moneylife Foundation),” in 2012. When the amounts are smaller, and the banking ombudsman summarily rejects the case without appeal, consumers give up in disgust and the bank escapes triumphant.

If Dr Rajan is serious about a fair deal for consumers, he has to fix the mis-selling of third-party products first. The Banking Ombudsman Scheme has to be modified to examine mis-selling of insurance and mutual funds and other products under ‘wealth management’. If Dr Rajan can open a dialogue with the central vigilance commission (CVC) to ensure that bankers are not traumatised by vigilance inquiries into legitimate decision, he should find it easier to get the insurance and capital market regulators on board, to make investment safer for consumers.

At the moment, most consumers are convinced that the banking ombudsman’s offices, often, actively collude with bankers in rejecting their claims. A starting point would be to study the decisions by the ombudsmen, in just a couple of banks which have the maximum complaints, and examine how they have dealt with the complaints. The findings will be an eye-opener for Dr Rajan.



Suiketu Shah

3 years ago

This wl change significantly in 6-8 months once Mr Modi comes into power with a clean majority 16/17 May.Currently wealth management companies mainly consist of people who are unable to earn money and therefore indulge in "legalised theft,looting and robbery"


3 years ago

I wish to highlight how Can Bk, Chairman, the OP {Opposite Party}, in this case has even stooped to indulge in Perjury to deny justice to his customer.

Can Bk Chairman, Opposite Party [OP], had the audacity to tell the court{both in District Forum as well as in State Commission}, that it is the onus of the victim to follow up with Police and obtain the Police Report and Can Bk will not do it! Also, he will not submit to court his own investigation report on such a serious complaint. He does not want to go to Police and obtain Police Report. That is the level of arrogance, Canara Bank Chairman displays to a customer who has fallen victim to his defective ATM system, and to Court.

Pushed to the corner, Victim runs around and gets the Police Report and submits it to Court as well as to OP.

Even after obtaining the Police Report, OP states in sworn affidavits, both to District Forum and State Commission that the victim has failed to obtain Police Report.That is a lie.

Victim pleads to Court for SUO MOTO action by Court for PERJURY as OP is resorting to lying under oath, in sworn AFFIDAVIT just to mislead the court and deny justice to victim.

Despite examples set by Honourable Supreme Court by taking prompt Suo Moto action in Perjury case, {case number and details, pointed out by victim}, court is still to take action on OP,for Perjury.It may never.That is the sad state of affairs.

RBI can make an example out of this default of Canara Bank Chairman and cleanse the rot that has set in, unchecked by Ombudsman.

Victim wrote to Ombudsman. Ombudsman washed its hands off claiming that this is a matter between customer and Bank, indicating that they would like to stay away from it!

Hope RBI steps in and eradicates this rot, now that esteemed Governor has recognized the problem of Banks denying justice to their customer without proving any negligence.

Once again, I will be delighted to submit to RBI, proof of all that I have stated here.


Mohan Raj


3 years ago

This is a nice and helpful article by our respected Sucheta.

It is very wonderful of the Governor of RBI, to have asked banks to limit customer liability in case of losses due to hacking and phishing, unless they can prove deliberate customer negligence.He must have come to know of many such cases being prevalent.

Canara Bank is a great defaulter on this score. Their ATM security system is flawed.I know of a case where the Canara Bk Debit card is with owner, PIN number is known only to him and yet three consecutive withdrawals to the tune of rs 21000/- have been made. Can Bank has the video footage, showing the culprit who did the hacking the RBI Governor is talking about.

Can Bk refused to reinstate the amount. Victim went to consumer court,District Forum. Chairman, Canara Bank is the Opposite Party. Court asked the OP of the bank to produce the enquiry report and video footage. Can bk kept silent. Court ordered reinstatement of amount.

Instead of being customer friendly, Canara Bank has gone on appeal, to State Commission with out producing any proof, just to harass the victim. One year is over and Canara Bank is likely to keep asking adjournments and keep dragging on the case.They have nothing to lose. Chairman will keep getting his salary and perks. Poor customer of the Bank is the loser. Does Canara bank care?

Canara Bank is a very customer unfriendly bank even as it is running a bogus ATM system which lends itself to fraudulent withdrawals. RTI has revealed that in 2013 alone CanBK had more than 340 of such fraudulent cash withdrawals of their ATM debit cards.More than one a day!
Data for 2014 must be even more alarming.

I wish Ombudsman steps in and calls for all the investigation report of each and every fraudulent cash withdrawal of Canara Bank, debit as well as credit cards and take suitable action. The Chairman of the Canara Bank needs to be hauled up and some stringent action taken against him for his unfriendliness towards his customers and dragging them to courts without proving any customer negligence as Governor is pointing out.

It is very sad that Canara Bank indulges in such misbehavior and Ombudsman is silent.Hope RBI steps in and rectifies this pathetic situation.

If the Canara Bank Chairman cannot ensure zero occurrence of fraudulent cash withdrawals,he has to be ordered to shut down his ATM operations, forthwith.

I will be delighted to give all the proof to RBI.


Mohan Raj

Yerram Raju Behara

3 years ago

I have aired this view earlier and is more relevant now than ever. Let banks do banking and even here, with technology overtaking, bank employees search for screen based solutions rather than knowledge based solutions as they are sparsely equipped with knowledge of banking. If Banks sell insurance and MF and other products, it will be like Tata's selling Hindustan Lever products. The product features would for sure be mis-sold

Nagesh Kini

3 years ago

Thanks Dr. Rajan for making a good beginning.
ML has always rightly demanded an end to commercial banks indulging in hawking of third party products that they are simply no geared to service after sale. They simply shouldn't carry out any business other than traditional banking.
The RBI has to be more transparent and invite more dedicated bank customers and professionals on board their committees rather than continue to retain the same old ones, however big he/she may be in the profession.
No Political appointees please!

Vaibhav Dhoka

3 years ago

Banks shold only be permitted to do banking and no other area be infringed upon.Here bank is in knowledge of funds available and its official is bound to cheat investor as he gets his incentive of work.

RTI Judgement Series: Display suo moto reports on Koodankulam nuke power plant

The Nuclear Power Corp must display suo moto the Safety Analysis and Site Evaluation Report of KKNP Plant I & II as per Section 4(1)(c) of the RTI Act, the CIC said. This is the 199th in a series of important RTI judgements given by former Central Information Commissioner Shailesh Gandhi

The Central Information Commission (CIC), while allowing an appeal, directed the Public Information Officer (PIO) of Nuclear Power Corp of India Ltd (NPCIL) to provide a to provide an attested photocopy of the Safety Analysis Report and Site Evaluation Report after severing any proprietary details of designs provided by the suppliers.

While giving the judgement on 30 April 2012, under the Right to Information (RTI) Act, Shailesh Gandhi, the then Central Information Commissioner, said, "...the Nuclear Power Corp of India shall publish all Safety Analysis Reports and Site Evaluation Reports and Environmental Impact Assessment reports prepared by the Department before setting up Nuclear Plants within 30 days of receiving them, unless it feels that any part of such report is exempt under the provisions of Section 8(1) or 9 of the RTI Act.."

Nagercoil, Tamil Nadu resident, Dr SP Udayakumar, on 25 April 2010, sought from the PIO information regarding Koodankulam Nuclear Power Plant (KKNPP), Reactor I & II in Tamil Nadu. For reactor I and II, he sought copies of Safety Analysis Report, Site Evaluation Report and Environment Impact Assessment report.

In his reply, the PIO said, the 339-pages Environment Impact Assessment report was available and the appellant can have a copy after paying Rs678 (Rs2 per page). "The Safety Analysis Report and the Site Evaluation Study Report were not public documents and contained design details that are proprietary in nature. As such the information was exempt under Sections 8(1)(a) and (d) of the RTI Act," the PIO said.

Citing PIO provided incomplete information, Dr Udayakumar filed his first appeal. The First Appellate Authority (FAA) agree with the PIO and observed that both the Safety Analysis Report and the Site Evaluation Study Report for KKNPP I & II were classified documents held by NPCIL.

Not satisfied with the FAA's ruling Dr Udayakumar approached the CIC with his second appeal. In his appeal, he said, safety and wellbeing of Indian citizens is very important and information must be provided (by NPCIL).

During the hearing, Mr Gandhi, the then Central Information Commissioner, observed that the copies of copies of the Safety Analysis Report and Site Evaluation Report of reactors I & II (collectively referred to as Reports) of the Koodankulam Nuclear Power Plant in Tamil Nadu were not provided to the appellant.

The PIO argued that the Reports were classified information and the concerned public authority had not taken a decision to release it in to the public domain. He submitted that the Reports were protected from disclosure under Sections 8(1)(a) and (d) of the RTI Act.

The Bench repeatedly asked the PIO the specific reasons for claiming the said exemptions. As regards Section 8(1)(a) of the RTI Act, the PIO stated that the security, strategic and scientific interests of the State would be affected on disclosure of the information. However, he did not give any explanations as to how the security, strategic and scientific interests of the State would be affected on disclosure of the said reports. Further, in relation to Section 8(1)(d) of the RTI Act, the PIO claimed that the Reports comprised of commercial confidence. However, he did not explain how disclosure of the said reports could be considered 'commercial confidence' and how it could harm the competitive position of a third party.

On the other hand, Dr Udayakumar, the appellant, contended that the exemptions under Sections 8(1)(a) and (d) of the RTI Act were not applicable to the present matter. He argued that a larger public interest would certainly be served on disclosure of the Reports. He also placed reliance upon the agreement between India and the International Atomic Energy Agency (IAEA) which lays down the safety and maintenance standards for nuclear activities.

Dr Udayakumar further submitted that reports of the same nature were classified as public documents in countries such as US, UK and Canada in order to ensure public debate. He also gave written submissions along with a CD detailing the arguments.

The Bench of Mr Gandhi then reserved its order.

During the next hearing on 30 April 2012, the Bench said it is legally well-established that information under the RTI Act can be denied only on the basis of Sections 8 and 9 of the RTI Act. "The fact that a record has been termed as 'classified', or that it shall be disclosed subject only to an executive decision to that effect-have not been stipulated as exemptions under the RTI Act. Therefore, the PIO cannot use such grounds for denying the information sought under the RTI Act; denial of information shall be on the basis of Sections 8 and 9 of the RTI Act only," Mr Gandhi said.

The Bench then examined the PIO's contention that the Reports were exempt from disclosure under Sections 8(1)(a) and (d) of the RTI Act.

Section 8(1)(a) of the RTI Act exempts from disclosure-"information, disclosure of which would prejudicially affect the sovereignty and integrity of India, the security, strategic, scientific or economic interests of the State, relation with foreign State or lead to incitement of an offence".   

Mr Gandhi noted that during the last hearing on 23 April 2012, even after repeatedly asking the basis for seeking exemption under Section 8(1)(a), the PIO gave no reasons.

Section 8(1)(d) of the RTI Act exempts from disclosure- "information including commercial confidence, trade secrets or intellectual property, the disclosure of which would harm the competitive position of a third party, unless the competent authority is satisfied that larger public interest warrants the disclosure of such information;".

Mr Gandhi said, "In order to claim the exemption under Section 8(1)(d) of the RTI Act, the PIO must establish that disclosure of the information sought (which may include commercial or trade secrets, intellectual property or similar information) would result in harming the competitive position of a third party. At the hearing held on 23/04/2012, the Commission repeatedly asked the PIO the specific reasons for claiming the said exemption. The PIO simply stated that the information was commercial confidence; he provided no explanation as to how disclosure of the said reports would harm the competitive position of a third party, except mentioning that the designs were of Russian manufacturers."

"From this statement and the PIOs contention that the reports contained design details, it appears that the contention was that design details of the plant were in these reports and divulging them may be considered disclosing commercial confidence, trade secret or intellectual property and such disclosure may harm the competitive position of the supplier," he said.

As per Section 19(5) of the RTI Act, in any appeal proceedings, the onus to prove that a denial of request was justified shall be on the PIO who denied the request.

"In the instant matter, the PIO has not given any justification for showing how the security, strategic and scientific interests of the State would be prejudicially affected if the Reports were disclosed-under Section 8(1)(a) of the RTI Act. Further, the PIO's argument indicates that exemption under Section 8 (1) (d) may be attracted if the design details of the plant were disclosed. It follows that the burden required to be discharged by the PIO under Section 19(5) of the RTI Act has not been done as far as exemption under Section 8 (1) (a) is concerned," the Bench noted.

After perusing documents submitted by Dr Udayakumar, the Bench observed that India was a member of the IAEA and had entered into the Application of Safeguards to Civilian Nuclear Facilities Agreement with IAEA in 2009. The KKNPP-Reactors I & II are included in the list of nuclear power facilities and installations annexed to the agreement for application of the safeguards prescribed by IAEA.

IAEA has, in its Safety Standards Series, issued a set of standards to be adhered to while undertaking a site evaluation for nuclear installations. IAEA has issued standards for the safety of nuclear power plants vis-à-vis design, operation and mitigating circumstances that could jeopardize safety. It prescribes safety assessment which is carried out in order to identify the potential hazards that may arise from the operation of the plant.

Dr Udayakumar had also referred to the Vienna Convention on Nuclear Safety, 1994 (Convention), to which India is a signatory. Article 5 of the Convention requires India to submit for review a report on the measures it has taken to implement each of its obligations under the Convention including evaluation of safeguards and safety standards in place for nuclear power plants.

He also cited the report of 2010 for India and referred to certain parts therein. It has been submitted that the report is required to be made in accordance with each Article listed in the Convention. "Reporting in relation to Article 17-which refers to 'Siting' makes it clear that site evaluation does not relate to national security matters under Section 8(1)(a) or anything protected under Section 8(1)(d) of the RTI Act. It purely relates to geography, environment, meteorology, geology etc. These are all connected with the environment directly and inextricably and have a huge bearing on public health and safety," the Bench noted.

It said, "Reliance has also been placed upon Article 14-'Assessment and Verification of Safety' and Article 18-'Design and Construction'. The appellant had also referred to a government of India monograph mandating what is involved in site evaluation study and contends that the monograph makes it clear that the entire exercise of site evaluation is for ensuring safety of the environment and the people from any danger or fallouts."

Mr Gandhi said the Bench found merit in Dr Udayakumar's contention. "The purpose of a site evaluation for nuclear installation in terms of nuclear safety is to protect the public and the environment from the radiological consequences of radioactive releases due to accidents, etc. The Bench notes that the site evaluation report not only provides the technical basis of the safety analysis report, it contains technical information useful for fulfilling the environmental impact assessment for radiological hazards. Therefore, it follows that the site evaluation report forms an important basis of the environmental impact assessment report as well. In order to appreciate the conclusions reached in the environmental impact assessment report, a citizen must have access to the site evaluation report as well. This will enable the public to obtain a comprehensive understanding of the likely environmental impact of the KKNP Project," he said.

"Given the serious implications of the internal and external safety factors relating to nuclear reactors there is a great public interest in disclosing the safety evaluation report of the KKNP Project. Disclosure of the site evaluation and safety assessment reports will enable citizens to get a holistic understanding of the KKNP Project including environment and safety concerns," the Bench added.

Section 4 of the RTI Act contains a statutory direction to all public authorities "to provide as much information suo moto to the public at regular intervals through various means of communications, including internet, so that the public have minimum resort to the use of this Act to obtain information".

More specifically, Section 4(1)(c) of the RTI Act mandates that all public authorities shall- "publish all relevant facts while formulating important policies or announcing the decisions which affect public".

It follows from the above that citizens have a right to know about the Safety Analysis and the Site Evaluation Study Report, which has been prepared with public money.

Mr Gandhi said, the PIO has not justified the denial of the information in terms of Section 8 (1) (a) as required by Section 19 (5) of the Act. The PIO did not give any reasoning to the appellant initially, nor did he provide any cogent explanation during the hearing to the Bench, he added.

Section 8(2) of the RTI Act states, "Notwithstanding anything in the Official Secrets Act, 1923 nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests".

"The Bench is of the view that the denial of Section 8 (1) (a) of the RTI Act has not been established, and there is certainly a larger public interest in the disclosure of these reports. Section 8 (1) (d) may be attracted if the said reports have details of designs of the plant which are specially provided by the suppliers. In that event the PIO can severe such design details which have been provided by the supplier as per the provisions of Section 10 of the Act," Mr Gandhi said.

Talking about safety evaluation reports, the Bench said, where worldwide, site evaluation and safety analysis reports of nuclear power plants and installations are being put in public domain to elicit public views, India can have no reason to treat its citizens differently.

"If such reports are put in public domain, citizens' views and concerns can be articulated in a scientific and reasonable manner. If the Government has reasons to ignore the reports, these should logically be put before people. Otherwise, citizens would believe that the Government's decisions are arbitrary or corrupt. Such a trust deficit would never be in the interest of the Nation," the Bench said.

While allowing the appeal, the Bench directed the PIO to provide an attested photocopy of the Safety Analysis Report and Site Evaluation Report after severing any proprietary details of designs provided by the suppliers to the appellant before 25 May 2012. "Further, the PIO will also ensure that the complete Safety Analysis Report and Site Evaluation Report and the Environmental Impact report are placed on website before 30 May 2012, the order said.

Mr Gandhi also said, "all Safety Analysis Reports and Site Evaluation Reports and Environmental Impact Assessment reports prepared by the Department before setting up Nuclear Plants  must be displayed suo moto as per the mandate of Section 4 (1)(c ) & (d) read with 4 (2). If parts of such report are exempt as per the RTI Act, this should be stated and the exempt parts could be severed, after providing the reasons for such severance. Such a practice would be in accordance with the provisions of Section 4 of the RTI Act and would result in greater trust in the Government and its actions."


Decision No. CIC/SG/A/2012/000544/18674
Appeal No. CIC/SG/A/2012/000544

Appellant                    : Dr SP Udayakumar,
                                        42/27, Esankai Mani Veethy,
                                       Parakkai Road Junction,
                                        Nagercoil, Tamil Nadu-629002
Respondent               : SK Srivastava,
                                         PIO & Deputy Chief Engineer (Projects),
                                        Nuclear Power Corporation of India Limited,
                                        Vikram Sarabhai Bhawan,
                                        Central Avenue Road, Anushakti Nagar,


Lok Adalat gaining ground, over 2 lakh cases settled so far

In six Lok Adalats, as many as 2.96 lakh cases were kept for disposal and over two lakh were actually settled

The concept of Maha Lok Adalat has been gaining momentum in Maharashtra with a large number of cases being amicably settled through alternate dispute redressal (ADR) mechanism.

Since 1995-96, over 1.73 lakh cases have been settled in the Maha Lok Adalats. In the five previous Lok Adalats, as many as 2.96 lakh cases were kept for disposal and over 1.73 lakh were actually settled.

In the recent Maha Lok Adalat organised at Nagpur on Saturday 28,839 cases were settled, thereby taking up the tally to 2.02 lakh cases resolved so far.

These include 1.35 lakh pre-litigation cases kept for disposal and 74,102 actually settled cases.

The National Lok Adalat, held only once so far last year, was also a success where 73,841 cases were kept and 57,041 of them were settled.

The District Legal Services Authority (DLSA), which co-ordinates the Lok Adalat, claimed that the settlement and success was to the tune of 89%.

Besides, amount of over Rs10.32 crore was also settled including in cheque bouncing and other cases while the court collected a fine of over Rs34.62 lakh in a day long Maha Lok Adalat on 12th April at Nagpur.

Justice ZA Haq of the Bombay High Court stressed upon the necessity of Lok Adalats to reduce the pendency in the judicial system.

He said ADRs serve a good purpose as the litigants are the best judges to understand their disputes and they know the factual position better. We should extend help to them being mediator or conciliator, he added.

The first Lok Adalat was held in 1995-96 in the premises of Nagpur Bench of Bombay High Court.



Vaibhav Dhoka

3 years ago

Lok Adalats are need of hour but judiciary should also wake up and reduce pendancy and see that orders are timely executed otherwise at present there is no use in getting order but execution is most painstaking procedure where money plays big role.Therefore judiciary should WAKE UP.

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