Money & Banking
RBI suddenly discovers that bank customers are getting the raw deal
The Reserve Bank of India (RBI), which had so far maintained a stony silence over the unfair treatment meted out to bank customers, is finally talking about it. In a recent speech, SS Mundra, Deputy Governor of RBI, said banks should not use service charges as an excuse to deny service or to drive away ordinary people. Unfortunately, this is exactly what is happening in the banking sector. Banks are arbitrarily increasing service charges without giving an opportunity to the average customer to react to a proposed hike. (Read: SBI, Canara Bank, Bank of Maharashtra again hit customers with hiked charges)
 
Mr Mundra said, "While banks have been granted autonomy in fixing minimum average balance or for charging for premium services, it should not be used as an excuse to deny service or to drive away the common man." Ironically, he was speaking at the Annual Conference of Principal Code Compliance Officers, organised by the Banking Codes and Standards Board of India (BCSBI), in Mumbai. BSCBI was set up as a toothless organisation by the Reserve Bank to set up common standards for all banks. It has neither laid down effective codes nor are these codes mandatory. BSCBI is another white elephant designed to pay lip service to banking standards. 
 
Incidentally, Moneylife Foundation has been at the forefront of speaking up for bank customers. An online petition launched by us has garnered more than two lakh signatures. (Sign the Petition)  One of the key points of the petition is about unreasonable and unfair bank charges. "Frequent increase in charges and billing customers by stealth through opt-out clauses that are not noticeable must be stopped immediately. For e.g. HDFC Bank started levying charges for an invite-only program, which unethically assumes that the customer is already in and willing to pay for it. The levy is stopped only when the consumer notices it and calls the bank to protest; this too is not an easy process," the petition says.
 
The petition at Change.org has asked RBI to come out with a master circular or notification on its Charter of Customer Rights issued on 3 December 2014. The charter recognises five basic rights of bank customers: Right to Fair Treatment; Right to Transparency and Fair and Honest Dealing; Right to Suitability; Right to Privacy; and Right to Grievance Redress and Compensation.
 
The Charter covers almost every problem that consumers were likely to face. Three years later, the RBI has not fixed timeframes for grievance redressal nor announced penalties for failure to treat consumers fairly, despite repeated appeals by consumer groups. Consequently, the Charter remains a toothless tiger.
 
Another issue that was mentioned in the online petition was about limited customer liability in case of an unauthorised banking transaction. The petition states, "While the Union Government is pushing consumers into digital transactions, we are not adopting global best practices to protect consumers. On 11 August 2016, the RBI issued a draft circular on limiting customer liability and shifting the onus of proving customer fault on banks.  RBI had sought feedback from public before 31 August 2016. However, it has not yet been converted into a Master Circular. We feel that with the increased use of digital payments post the demonetisation drive, it is necessary to have in place a mechanism or system to protect customers from unauthorised banking transactions. A Master circular/notification by the Reserve Bank on limiting liability in an unauthorised banking transaction will make a huge impact on protecting customers from frauds."
 
The RBI Deputy Governor, in his speech, admitted that there is an immediate need for plugging all the gaps and vulnerabilities in tech-enabled service delivery, especially looking at several incidents of theft of personal information, fraudulent use of ATMs, net banking frauds, ATM/ Debit card incidents or cases of unauthorised access to bank servers. "With greater thrust on digital banking, especially in the wake of withdrawal of legal tender status of specified bank notes and consequent increase in complaints relating to unauthorised or fraudulent transactions, a need for having a comprehensive policy to limit the liability of customers cannot be over-emphasised. RBI had come out with a draft circular on ‘Customer Protection – Limiting Liability of Customers in Unauthorised Electronic Banking Transactions’ earlier and based on feedback received from the concerned stakeholders, final guidelines are expected to be issued shortly. In view of the impending guidelines it would be prudent on the part of banks to internally tighten their IT security systems and operating procedures so that grievances are minimised," Mr Mundra added.
 
He also admitted that the internal ombudsman system that is in place for the past two years has not become an effective forum. "Office of Internal Banking Ombudsman (IBO) was envisaged as the ultimate authority to which all unresolved or partially resolved complaints were to be escalated before giving final verdict to the complainant. Only in cases where the customer remained unsatisfied with the resolution should she need to approach the BO. A continuous rise in the number of complaints to the BO is perhaps a pointer to the fact that the institution of IBO has not been very effective or has not been empowered enough by the Management," he said.
 
The online petition, titled, "RBI Governor: Please Stop Banks Fleecing us Depositors!", says, "Over the years, the RBI has remained silent on several anti-depositor actions of banks. The Banking Ombudsman's rulings also tend to side with banks, making no attempt to observe the pattern of complaints which would amply bring out rampant mis-selling of insurance and wealth management products." 
 
Mr Mundra asked banks to be prepared for a few impending regulatory changes as well as enhance their focus on some of the supervisory concerns relating to customer complaints that have been observed by RBI. 
 
Talking about cryptic and generally inscrutable entries or narration, despite extant guidelines that mandated recoding of intelligible particulars in bank passbooks or statements, the Deputy Governor, said, "Of late, we have received numerous complaints not only from customers but also from the investigative agencies, who find it extremely difficult to understand the transactions during the course of their investigations. RBI is in the process of reiterating its guidelines to banks to provide essential minimum relevant details in respect of various transactions in the passbook or statement."
 
In the online petition, the making of banking transactions safe by capturing additional data, such as name and branch details, and having a robust redress process for inadvertent mistakes, was highlighted. 
 
Bank customers, especially senior citizens, often complain about several issues they face in the branch. Taking note of this, Mr Mundra, in his speech, said, "Customer service to senior citizens is an area of major concern for the RBI. Difficulties are faced by pensioners in receiving updated pension, issuance of life certificates, verification of signature, and need for periodic KYC. Several grievances have also been received from nominees of deceased customers while seeking settlement of death claims."
 
Mr Mundra also asked banks to address the frustration felt by customers while dealing with call centres or automated response systems. "In this context, while the efforts by some of the banks to use artificial intelligence-driven chatbot for enhancing customer service are welcome, it needs to be ensured that the customers do not end up receiving robotic responses!" he concluded.
 
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COMMENTS

Ramanath nakhate

3 weeks ago

In the past few years, the banks have been finding innovative ways to fleece their customers. The banks have reduced the interest rates on deposits from a high of 10% five years ago to a low of 6.5% 7.5% as on date. The banks have recently started giving rude shock /s to the customers in instalments. State Bank of India increased the minimum monthly average balance (MAB) to be maintained by the SB account holders. For example, the SB account holders in Mumbai have had to MAB of Rs.5000 from 01-04-2017, as against the MAB of Rs.1000. Non maintenance of MAB invites penalty up to Rs.100.
State Bank of India, Canara and some other banks have last month notified increase of service charges on issue of cheque books etc. from July 1, 2017. It is reported that RBI is going to examine the usurious service charges levied by banks. The customers are not interested in lip sympathy of RBI. They want that RBI should act in the interest of customers. RBI should ensure and prevail upon banks to reverse all the anti customers and anti depositors decisions taken by the banks.

suneel kumar gupta

3 weeks ago

Banks' management is trying to show that dismal performance is because of this free service while reason is their focus on third party business and poor accountability. They performed very well when these were not there.

Sisir

3 weeks ago

1. RBI is still behaving as a private organization, that is duty bound to protect the bankers - but not bank customers.

2. Main motive of demonetisation is to help the bankers get funds, so that they don't put much pressure on NPA cronies of politicians.

3. Many RTIs that I had filed to RBI clearly shows that RBI doesn't care the law of the land much.

4. RBI's reluctance in disclosing information reg demonetization RTIs makes it clear one more time that it is a partner in the crime, an accomplice.

5. As if this is not enough, RBI is now being infiltrated by the ex-staff of big business houses. So now they now have insiders who get confidential information, and make business decisions accordingly.

6. When RBI Ombudsmen themselves collude with bankers, does it make any sense to allow internal ombudsmen of banks?

7. When some presiding officers of DRTs collude with bankers, RBI pretends as if it doesn't know.

8. When politicians waive off farmer loans for their own benefits, RBI doesn't work on preventing such acts which would have serious consequences on the economy.

9. When PMO interferes in RBI's independence in the name of demonetization, still it doesn't know how to protest!

10. When RBI could devise so many schemes for big ticket NPA holders, but none for the common-man-defaulters, we still shouldn't suspect its intentions; as the former helps grow the economy while the latter mess up the economy (as per its thought process).

11. RBI doesn't have any clue about how banks should not harass bank customers in the name of KYC verification.

The list is endless!

Pradeep Kumar M Sreedharan

4 weeks ago

Reason that RBI suddenly decides to wear that Holy ring over it's head is to maximise credibility before naive public, on number portability.

When RBI functions like an Aalibaba, nothing is going to change.
Cartelisation of banks must be broken. CCI seems to be sleeping (earlier it was RBI)

Simple Indian

4 weeks ago

RBI has never stood for customers but has instead turned a blind eye to Banks' violation of its own rules & guidelines. For instance, SBI Chairperson had publicly stated that the Bank will raise MABs for regular customers (substantially) to help the Bank maintain Jan Dhan A/cs, promoted by the Govt of India. This is a clear case of robbing Paul to pay Peter. Why should regular customers, who have nothing to do / gain from JDY a/cs with Banks, pay for maintaining JDY A/cs by Banks ? Instead, why can't Govt forego its fat dividends from PSU Banks, and use the funds to maintain JDY A/cs ? Will RBI ever stand up to such excesses by Banks ?

PRAKASH D N

4 weeks ago

Respected Deputy Governor, instead of lamenting should take action against Banks which are taking the customers for a ride. If RBI continues to remain silent, public should ask for an independent regulator who shall approve the service charges like IRDA, Electricity Regulatory Authority etc. Kudos to Moneylife for its sustained campaign.

gvn rojarao

4 weeks ago

RBI wants you to keep your account number while switching banks,THIS GREAT OPPORTUNITY TO SBI ACCOUNT HOLDERS TO SWITCH TO BAST SERVICE & NO HIDDEN CHARGES COLLECTING BANK

Raj K Swamy

4 weeks ago

The RBI knows it and probably a silent partner as the loot of ordinary SB customers are the easy way for banks to survive. For ex , from a my fathers (90+ yrs old) TDS was deducted by a PSU bank in March 1st week (2017) and was not deposited with tax authorities till date (31.5.17). Complaint to banking Ombudsman did not help. The banks seems to have found an easy way to fund their operations at the expense of helpless customers. We still wait!

Pradeep Kumar M Sreedharan

4 weeks ago

When CBI raids RBI vaults to counterfeit Indian notes in bulk quantities, what standing does it have? Other than that of Aalibaba covering it's 40 thieves?
Ref The Great Game India article, Nov 2016.

REPLY

Pradeep Kumar M Sreedharan

In Reply to Pradeep Kumar M Sreedharan 4 weeks ago

to FIND counterfeit..........

Ajay Kumar De

4 weeks ago

First of all, I must say that very senior officers of RBI itself is in cases found actively involved in large scam. Sounds unusual - request every reader to inquire how and for holy purpose RBI went on watching only for long 27 years maneuvering of the Himalayan scam in Ramkrishnapur Cooperative Bank in Howrah (WB) in league with the then Cooperative Minister/s in chair obviously along with their officers. All the Finance Ministers at centre during last six/seven years have personal knowledge with vulnerable documents handed over to them in person. RBI's joining hands with the scamsters axed nearly 50,000 odd depositors of the bank.

Particularly nationalized banks including SBI need to be directed to refrain from asking customer to pay even for signature verification in yearly 'live certificate'.

It is possible that a litigation on the feud between Rajanji and Modiji on exchange of SBNs after 31st Dec. 2016 only from offices of RBI as was announced by Modiji on 08th Nov. 2016 but for his arbitrary encroaching jurisdiction of Rajanji is still pending.

Moneylife may kindly like to enlighten on the issues.
First of all, I must say that very senior officers of RBI itself is in cases found actively involved in large scam. Sounds unusual - request every reader to inquire how and for holy purpose RBI went on watching only for long 27 years maneuvering of the Himalayan scam in Ramkrishnapur Cooperative Bank in Howrah (WB) in league with the then Cooperative Minister/s in chair obviously along with their officers. All the Finance Ministers at centre during last six/seven years have personal knowledge with vulnerable documents handed over to them in person. RBI's joining hands with the scamsters axed nearly 50,000 odd depositors of the bank.

Particularly nationalized banks including SBI need to be directed to refrain from asking customer to pay even for signature verification in yearly 'live certificate'.

It is possible that a litigation on the feud between Rajanji and Modiji on exchange of SBNs after 31st Dec. 2016 only from offices of RBI as was announced by Modiji on 08th Nov. 2016 but for his arbitrary encroaching jurisdiction of Rajanji is still pending.

Moneylife may kindly like to enlighten on the issues.
First of all, I must say that very senior officers of RBI itself is in cases found actively involved in large scam. Sounds unusual - request every reader to inquire how and for holy purpose RBI went on watching only for long 27 years maneuvering of the Himalayan scam in Ramkrishnapur Cooperative Bank in Howrah (WB) in league with the then Cooperative Minister/s in chair obviously along with their officers. All the Finance Ministers at centre during last six/seven years have personal knowledge with vulnerable documents handed over to them in person. RBI's joining hands with the scamsters axed nearly 50,000 odd depositors of the bank.

Particularly nationalized banks including SBI need to be directed to refrain from asking customer to pay even for signature verification in yearly 'live certificate'.

It is possible that a litigation on the feud between Rajanji and Modiji on exchange of SBNs after 31st Dec. 2016 only from offices of RBI as was announced by Modiji on 08th Nov. 2016 but for his arbitrary encroaching jurisdiction of Rajanji is still pending.

Moneylife may kindly like to enlighten on the issues.



Sunil Rebello

4 weeks ago

Moneylife once again - Thank you for everything you do for the Aam Admi.
All and everyone want easy cash from the person in need.
All political parties have only one aim. how will we fill our pockets.
Industry is no less they will rob their own Share Holders i.e. RAYMOND.
you and other like minded NGOs have to be vigilant, in order that the person in need is not taken for a ride, by the fat goons of our society.
GOD BLESS

Gurudutt Mundkur

4 weeks ago

Was Mr Mundra voicing the thinking of RBI? And why is he voicing these thoughts or impressions or observations or analysis when he near the end of his term? Could he not be more specific rather generalizing? Most readers would look forward to the next steps RBI takes, if the persons in Office share Mr Mundra's thoughts and observations.

Vaibhav Dhoka

4 weeks ago

I am banking with Bank of Maharashtra for last five decades their service and customer care is very annoying.They are getting self satisfied by fleecing petty account holders but do not thrive to upgrade online system. ASBA issues are not properly accepted leading heavy loss to account holders who participate in IPO.

SuchindranathAiyerS

4 weeks ago

Banks have become as totalitarian as India's "Governance" and Constitution thanks to computers. Somebody sitting at some remote location hits your account with charges and does whatever they want while all the Branch staff are empowered to do is demand copies of Aaadhar Card for every transaction. India, like its Prime Minister is Tech Crazy rather than Tech Savvy. And, like India's colonial State exists purely for its own self at the expense of the citizen. But then, if the man who tabled and saw through retrospective legislation becomes the President of India, the Nation in general and the Banks in particular surely have the right to loot in the image of their Rashtra Potty?

REPLY

Pradeep Kumar M Sreedharan

In Reply to SuchindranathAiyerS 4 weeks ago

Well said Sir, Pranaam

SRINIVAS SHENOY

4 weeks ago

The charges levied by the bankers should be on par with the International standards. So also the bankers have to do a lot on the customer service front and prompt recovery of overdues, so as to enable our economy to flourish.

REPLY

Pradeep Kumar M Sreedharan

In Reply to SRINIVAS SHENOY 4 weeks ago

They may charge international, after they serve international

Nifty, Sensex looking toppy – Wednesday closing report

We had mentioned in Tuesday’s closing report that Nifty, Sensex might retreat a bit. The major indices of the Indian stock markets were range-bound on Wednesday and ended flat, as compared to Tuesday’s close. The trends of the major indices in the course of Wednesday’s trading are given in the table below:

After a negative start, the Indian equity markets on Wednesday traded at new highs during the mid-afternoon session with buying in automobile, consumer durables and capital goods stocks. Market observers opined that investors traded on a cautious note ahead of the release of India's quarterly estimates of GDP growth for the fourth quarter of 2016-17, and the index of eight core industries (ECI) figures for April 2017. On the NSE, there were 938 advances, 702 declines and 311 unchanged.

 
The S & P BSE Sensex touched a new intra-day high of 31,233.68 points. The BSE market breadth was bullish -- with 1,384 advances and 1,119 declines.
 
All the sectoral indices, led by realty, auto and consumer durables, traded in the positive zone with gains up to 1%. Sensex and Nifty both remained range-bound and market analysts do not expect any high volatility with consolidation on the menu for the market.
 
Private non-life insurer Cholamandalam MS General Insurance Company Ltd on Wednesday said it has raised Rs100 crore by privately placing 1,000 unsecured redeemable non-convertible debentures (NCD). In a statement, the company said the NCD's will be listed in NSE. The 10-year NCD has a coupon rate of 8.75%. The NCD has a call option after five years. "We have augmented our capital base by issuing subordinated debt, post the recent measures announced by the Insurance Regulatory and Development Authority of India (IRDAI), allowing alternative forms of capital," Managing Director and CEO SS Gopalarathnam said in the statement. Cholamandalam Investment and Finance Company closed at Rs1,026.10, up 2.58% on the BSE.
 
State-run steel manufacturer SAIL reported a net loss of Rs771.3 crore for the fourth quarter ended March, which was lower than the loss incurred in the same quarter of 2016, on the back of higher revenues during the last quarter. The company suffered a net loss of Rs1,184.64 crore in the corresponding quarter a year ago. For the entire fiscal 2016-17, SAIL has narrowed down its losses by 30% and recorded an overall improvement, including in production, sales and productivity, the company said in a stock exchange filing on Tuesday. During the quarter in consideration, the company's total income increased to Rs14,543.50 crore, as compared to Rs12,946.5 crore in the same period a year ago. "The unprecedented increase in coal prices during FY17 impacted the numbers and stunted the overall margins," SAIL said. Chairman PK Singh said in a statement that despite sharp hikes in imported and domestic coal prices, SAIL has "managed to compress the loss."  "There is an improvement in the performance on all accounts," he pointed out. The company’s share price closed at Rs57.15, down 2.22% on the BSE.
 
Mahindra and Mahindra reported a rise of 19.93% in its standalone net profit for the fourth quarter (Q4) of 2016-17. According to the company, its standalone net profit during the quarter under review rose to Rs725.16 crore from Rs604.63 crore reported in the corresponding period of 2015-16. The Q4 standalone total income of the company inched higher by 4.04% to Rs12,319.64 crore from Rs11,840.47 crore earned in the corresponding period of the previous fiscal. On a full financial year 2016-17 basis, M&M reported that its standalone net profit increased by 23.43% to Rs3,955.65 crore from Rs3,204.57 crore earned in the previous fiscal. On the group level, the company reported a 13.95% surge in its consolidated profit to Rs4,050.53 crore for the fiscal year from Rs3,554.50 crore reported in 2015-16. The company pointed out that the Supreme Court's 29 March 2017, orders on the sales issue of non BS-IV compliant vehicles caused a negative impact of Rs171 crore. "The outlook for 2017-18 is much more robust with a favourable domestic and global backdrop," the company said in a statement. Mahindra & Mahindra shares closed at Rs1,416.35, up 3.99% on the BSE.
 
The Indian economy will grow at 7.5% in the current fiscal, which rate will accelerate to 8% in about four years, US rating agency Moody's said on Wednesday ahead of the release of GDP figures for 2016-17 later in the day. "We expect marginally faster growth in India. According to our forecast the economy will grow 7.5% in fiscal year 2017 (2017-18) and 7.7% in fiscal year 2018 (2018-19)," Moody's Investors Service said in its Global Macro Outlook. "Overall, we continue to believe that economic growth will gradually accelerate to around 8% over the next three to four years," it said. The American agency also said that the negative impact of the November 8 demonetisation of high-value currency on the economy was limited in size and duration. "The ruling BJP's victory in the Uttar Pradesh state elections indicates that the government has remained politically popular despite the demonetisation exercise," the report said. This augurs well for medium term investors in the stock markets and indirect investors who invest through mutual funds.
 
The top gainers and top losers of the major indices are given in the table below:
 
 
The closing values of the major Asian indices are given in the table below:
 
 

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COMMENTS

Gurudutt Mundkur

4 weeks ago

As the share prices are rising, there would be a number of people losing money --- if not in actual terms, at least in notional terms.







REPLY

Gurudutt Mundkur

In Reply to Gurudutt Mundkur 4 weeks ago

This not in reply, but in continuation... a bear today becomes a bull tomorrow and also the other way round. If that is not so, there would no "buy" and no "sell", no BSE no NSE!!!

Indian economy grew at 7.1% in 2016-17, Q4 GDP growth at 6.1%
India's gross domestic product during the past fiscal grew at a lower rate of 7.1%, the official statistician said on Wednesday.
 
"Real GDP at constant (2011-12) prices for the year 2016-17 is estimated at Rs121.90 lakh crore showing a growth rate of 7.1% over the year 2015-16 of Rs113.81 lakh crore," the Central Statistics Office said in a statement. 
 
In terms of gross value added (GVA), which excludes indirect taxes, the growth came in even lower at 6.6% over the GVA for 2015-16.
 
The GDP growth for the fourth quarter of last fiscal also fell more sharply to 6.1%.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

 

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