The former deputy governor of the RBI says that if a bank offers you a higher rate of interest than its peers, you should be a little careful
The questions and answers (Q&As) below are part of a discussion that took place on International Women’s Day at a financial literacy workshop organised by Moneylife Foundation. Kishori J Udeshi, Chairperson of the Banking Codes and Standards Board of India (BCSBI) answered the questions asked by the audience. Earlier, the Moneylife Foundation felicitated three women activists who have a made a difference to society, fighting for various causes and standing up for the middle class. Ms Udeshi, the former deputy governor of the Reserve Bank of India, felicitated Ms Indrani Malkani of the Malabar Hill Residents Association, Ms Anandini Thakoor of the Khar Residents Association and Ms Sumaira Abdulali of the Awaaz Foundation. Here is the first part of the Q&A.
Audience (ML): What do you mean by ‘know your bank’?
Kishori J Udeshi (KJU): What I meant by ‘know your bank’ is, you should know about your bank’s financials. Whatever is published, whatever is on their websites, if you even know that much, it is more than enough because the amount of disclosures, half of us don’t even read it, the rest of us don’t even understand it. However, there are a lot of disclosures now, so it is good to know who your bankers are. As rightly pointed out by Sucheta (Dalal), there is something called as greed. When someone offers you a rate of interest that is higher than what the rest are offering I would say avoid. It’s greed that drives them and greed has no limits. But as a basic rule, I would say, that if a bank offers you a higher rate of interest than others, you should be a little careful and if it is not a bank then don’t even go near.
ML: What do we do when banks demand unnecessary information that is unrelated to the loan or investment?
KJU: You need not give any information which is not needed. They are not supposed to (ask for it) and you can complain (about it) and be assured you can be heard and they will take action, but if you have given it (the information) on your own, violating your rights, nothing will be done. I know these instances. Why don’t you bring it to our notice? It seems that people are very afraid of speaking against teachers, doctors and bankers.
ML: Can you explain the minimum balance that banks require on savings accounts?
KJU: The minimum balance can be any amount except for a no-frills account. But any bank is free to fix any amount as minimum balance, that is because neither the Reserve Bank of India nor BCSBI would like to interfere with commercial considerations. As long as they are transparent about it, as long as the bank tells you about it, this is our minimum balance and would you like to open an account, then you open it, then it is your option and we would not consider it as a grievance. Having said that, we do feel that this is not correct. Some banks have minimum balance requirements of Rs25,000-Rs50,000, and these are mostly foreign banks. We haven’t taken up these cases yet. First, these are commercial considerations beyond our scope and secondly if customers want to open accounts with such banks that stipulate such high minimum balance, then why get into it?
The no-frills account is for the urban poor who don’t have banking services available to them. Now RBI has said that banks should not turn away any customer who comes to open a no-frills account for which the balance cannot go beyond Rs50,000 in a year. Yet, no bank has cared to open any account. Here we are talking about the urban poor. There are about 80 million urban poor, as per the National Sample Survey. All over the country, we have politicians and bankers using the buzzword of financial inclusion. But everywhere they talk about only villages. Yes, we do need to, but who is taking care of our domestic servants, drivers, house cleaners and so many? Why should a vegetable seller or hawker be denied a banking service in Mumbai just because he is poor?
ML: Banks are asked to give 3.5% interest per annum on savings accounts on a daily basis. Is it really beneficial for a common account holder?
KJU: Let me tell you something about your savings account. You think that your savings account is earning 3.5%, but the reality is that you are getting only 2.8%. We fought for it and the RBI had agreed and now from 1st April you’re likely to get 3.5%. I say 3.5% because who knows they may even postpone it. Banks will have to give interest on a daily basis and not the old system. Do you think banks have taken this quietly? Banks are running on the basis of your deposits. You put your money there not realising that inflation is more than 10%, and banks are saying that if you are saying that banks should pay on a daily basis and therefore it should be 3.5%, then you should lower the rate of interest and the interest should be 2.5%. Why should it be reduced? Depositors are always at the receiving end. It is only the elite, the corporates who are heard. They get what they want and nobody writes about the depositors. And it is our savings and we never say a word.
ML: How do we deal with the inoperative account rules of banks?
KJU: It is sad that even if there are credits to an account—say your interest, but you don’t withdraw, it (the account) is considered as inoperative. If for two years you don’t use your account then they would start putting charges or say it is inoperative and then put a penalty afterwards and then you would have to close that account and again start and open a new account. But if you read the banking code, now they (banks) have to write to you three months in advance and inform you that your account is inoperative. Therefore, they have to write and notify you of the ramifications, as a right. Even if you put Rs20 it becomes operational. And the RBI has also said that in order to make it operative, banks shall not charge.
End of Part I
The BSE has launched its Sensex mobile streamer, a platform that would allow investors to access streaming Sensex data at their fingertips
The country's premier bourse, the Bombay Stock Exchange (BSE), on Tuesday launched its Sensex mobile streamer, a platform that would allow investors to access streaming Sensex data at their fingertips.
The facility will also help investors make critically-timed trades.
"BSE is proactively making available the critical information to investors on their mobile phones free of cost. We look forward to adding more features and functionality improvements over the coming months," BSE's managing director and chief executive Madhu Kannan told reporters.
The mobile streamer can be accessed on the BSE's website. The software is easily downloadable on GPRS-activated SIM cards and Java-enabled handsets.
The Sensex mobile streamer was launched in the presence of Sadhguru Jaggi Vasudev.
The government has received a number of representations on conference visa norms, requesting it to reconsider the revised guidelines
The Indian government on Tuesday said that it was ready to revisit the new guidelines issued for granting tourist and conference visas if there were genuine grievances, reports PTI.
Home secretary Gopal K Pillai said that the government has received a number of representations requesting it to reconsider the revised guidelines.
"Government makes rules, government makes regulations which may not be correct. But in a democracy there is a system, we correct ourselves if a mistake is made. If (an) error is made, we correct them," Mr Pillai said while addressing a seminar on ‘Thought Policing or Fighting Terror; Home Ministry's Curbs on Foreign Scholars’.
Later, Mr Pillai told reporters, "We have received a number of representations (on conference visas) and we are examining them. This is under consideration".
His comments came when asked whether there was any move to revisit the new guidelines for conference visas.
According to the revised guidelines for conference visas, prior security clearance from the home ministry is required for participants from Afghanistan, Bangladesh, China, Iran, Pakistan, Sri Lanka, Iraq, Sudan, foreigners of Pakistani origin and stateless persons.
Besides, the home ministry's clearance is also required if the participation involves a visit to restricted or protected areas in India or to areas affected by terrorism, militancy and extremism, like Jammu & Kashmir and the North Eastern states, and if the conference involves politically sensitive subjects.
Referring to the restrictions imposed on issuing tourist visas, the home secretary said that the government was open to amend any rules if there was any 'mistake'.
Mr Pillai wondered how many of the six million genuine tourists, who visit India every year, would like to come back to India within 60 days. "Six million tourists come and go. How many of them come within 60 days? Possibly not even 0.1% of the total number of tourists," he said.
The recent guidelines on tourist visas stipulate a gap of at least two months between two visits to the country. Mr Pillai, however, said that the government was ready to examine if any genuine tourist is harassed following the new guidelines.
"If the problem is of that 0.1%, we are ready to see how best that can be corrected. The government is willing to see how best the problem of that 0.1% people is solved. But no decision can satisfy all people. That is part of the problem. That is the government system," he said.