From a California-based Doctor to a Watchman – It's a Long, Hard Battle for Financial Consumers
When it comes to bank-related problems, there are no class barriers—each one of us is equally at risk and at the mercy of abysmal grievance redress system. Consider the stories of these two harried bank customers that Moneylife Foundation has been trying to help. 
 
Prakash Awadhesh Mishra (Mishraji to us), from Azamgarh in Uttar Pradesh, works as a watchman in Mumbai. Like many people from that impoverished state, he is up-to-date on current affairs, works very hard—often doing 18-hour shifts—to earn and save every penny for his family and their future. 
 
What he does not have is a proper roof over his head in Mumbai and, consequently, an address proof. So, opening a bank account is a huge challenge and a privilege, despite all the lip-service to financial inclusion paid by the Reserve Bank of India (RBI).
 
He told us how he managed to open an account at Union Bank of India (UBI) only through a recurring deposit which, apparently, did not need strict address proof. Over time, he persuaded the Bank to convert his savings into a fixed deposit (which has a princely sum of Rs2 lakh) and a savings account with Rs16,000. 
 
So, when he changed jobs and moved from Bandra to Shivaji Park, he didn't dare close his account; but he remained confident that his money was safe in a nationalised bank, until he wanted to withdraw it. Now, look at what happens to people like Mishraji, dealing with incompetent private agencies, sub-contracted to issue key identity documents. 
 
Like most migrants, Mishraji has a PAN (permanent account number) card, because it is the easiest identity to obtain. It was, however, issued with a wrong date of birth (1966). He had retained it, because he had no idea how important it is to get it rectified. 
 
He also obtained an Aadhaar which the government promised was the magic number to open all doors. His Aadhaar also has another wrong date of birth (1 October 1960). He is proud to have an original birth certificate and documents from his village school (rare for people like him) which list his birth year as 1962.
 
Such mistakes are the norm. Mishraji didn’t realise the imperative need to get them rectified. In his case, every day spent on getting an identity and then rectifying it involves a loss of income. 
 
Earlier this week, Mishraji went back to Azamgarh after five long years in Mumbai. Since he has no home, withdrawing his savings from the bank was kept till the end. A couple of days before he left, he went to the bank to withdraw his savings, only to be told that his account is dormant.
 
For most educated people, getting it activated is a simple matter of submitting KYC documents afresh; but thanks to inefficient government agencies and wrong IDs, Mishraji faced a nightmare. Unlike millions of others in his situation, he got in touch with Moneylife Foundation. We are lucky to have a very committed former central banker volunteering his time to guide people. 
 
The RBI circular on dormant accounts requires banks to seek KYC documents, to reactivate the account. Typical of RBI, this prescriptive ‘fatwa’ does not take into account people like Mishraji, who don’t have proper documents even while opening the account and end up with no access to their own money. The system has no room for empathy, or alternative verification. So, he was rudely turned away and even calls from a retired CGM (chief general manager) from RBI’s consumer services department was not good enough to vouch for his identity. He, eventually, went back to Azamgarh without a chunk of his savings. 
 
Remember, Mishraji is an unusually smart and well-read person. What happens to millions of migrants who are less literate and more helpless? Wouldn't the system simply gobble up their savings? The massive pool of over Rs19,500 crore in unclaimed deposits transferred to RBI until June 2018 is testimony to this. 
 
Now let us look at another story. 
 

Dr Ajay Sood is a California-based non-resident Indian (NRI) with a non-resident ordinary (NRO) account at Bank of India’s (BOI) Chandigarh branch. The money in the account is his mother’s lifetime savings to be used for her welfare. On 20 July 2018, Dr Sood found that the account was almost emptied out, with two huge debits—of Rs98 lakh and Rs35 lakh, respectively—using cheques from his NRO account. 
 
Not only had he not withdrawn the money, but he had in his possession the original chequebooks with the exact same cheque numbers on which the money was purportedly withdrawn. 
 
After speaking to the Bank and filing a first information report (FIR), he learnt that his mobile number with the Bank had been changed and a false Aadhaar card submitted with his photograph but wrong information about his father’s name. Dr Sood did not even have an Aadhaar-linked account. 
 
Dr Sood is an innocent victim of a fraud that occurred at BOI. But BOI simply would not respond to him. He connected with Moneylife Foundation on 5th September, following which we helped take up the matter with the RBI. This, finally, led to a communication from BOI asking for the original cheques and informing him that the ‘matter of payment’ of the unauthorised withdrawal of Rs1.33 crore was “under process and will take some time. You are requested to kindly bear with us for some more time.” On 19th December, Indian Express reported that the Chandigarh police had arrested two people in connection with the fraud. But that is cold comfort for Dr Sood, since his money has still not been returned. 
 
What if the account were still in his mother’s name and this was her only source of income? Why should the victim of a bank fraud, that calls into question the bank’s weak security system and verification practices, punish an innocent customer?
 
UPDATE: After the story was published, Dr Sood, came to know credit of his principal amount in his account.
 
If RBI’s rules limit customer liability for digital fraud and mandate that victims should have their money credited back within 10 days, why is there no time-bound redress system for other innocent victims of bank frauds? Rules for digital transactions have shifted the onus of proving customer negligence in case of “banking system frauds and third-party breaches” to the bank. It is common sense that the same should apply to physical fraud, especially since a large bank ought to have a comprehensive insurance cover for such eventualities. 
 
Since Dr Sood is able to produce cheques with the same numbers that were used to withdraw massive sums of money, the finger points to internal collusion and, yet, he is subject to mental agony and his money has not been returned for over four months. 
 
Where is the accountability of bankers, who dare to ignore a customer who had a hefty Rs1.33 crore deposited with it for safe custody? Why does he need an NGO (non-government organisation) or former RBI officials to intervene to get the courtesy of a formal communication? And what about compensation and interest?
 
One of prime minister (PM) Narendra Modi’s first big actions was a financial inclusion drive to give all Indians access to formal credit through a bank account. Like several of PM’s big ideas, this one, too, had revived a failed effort of the UPA (United Progressive Alliance) government, but came with better branding (the Pradhan Mantri JandhanYojana—or Jandhan for short), plenty of hype and subterfuge in terms of genuine new accounts opened. 
 
Jandhan was further hyped-up as JAM (Jandhan-Aadhaar-Mobile) during demonetisation (after 8 November 2016) by making Aadhaar and linking of mobiles to bank accounts mandatory (until it was halted after a long-delayed Supreme Court judgement in 2018), not-so-savvy or literate bank depositors became easy prey to digital fraud. 
 
RBI watched and did nothing. Oh wait! Its deputy governor SS Mundra made a speech and published a draft regulation on limiting customer liability. The rules were, finally, notified after an online campaign and tweet-morcha in July 2017. An enabling provision was only the first step. Earlier this month, RBI has promised a separate ombudsman for digital transactions whose rules will be notified in January 2019. This is after complaints of digital fraud have risen to as much as 28% of all complaints, as in June 2018. 
 
Given the pathetic performance of the existing banking ombudsmen, who are openly biased towards banks, this does not hold out much hope for victims who see their hard-earned savings vanish.  
 
Instead of putting in place a robust grievance redress mechanism that works in a time-bound manner and a fair payment of interest, compensation and damages, the government is actually toying with the idea of a digital security cess, to create infrastructure for digital security, on top of making it increasingly mandatory to use digital transactions. Is it any wonder then that there is a massive consumer pushback and people are using more cash than ever before? 
 
For too many people, the lesson from demonetisation is that cash in hand, even when it doesn’t earn interest, is more secure than money in the bank. According to World Bank’s Global Findex Database, 2017, at a whopping 48%, India tops the world in terms of bank users with inactive bank accounts. 
 
While the government has an aggressively different spin on it, the cases that we encounter everyday at Moneylife Foundation show that there is a good reason for this state of affairs. Until RBI is made more transparent and more accountable to people and Parliament about its performance as a banking regulator and supervisor, victims of banking fraud will remain at the mercy of such a callous system—whether they are well-off or poor. 
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COMMENTS

K V RAO

4 weeks ago

I do not agree with the writer that when she asserts Mishraji is an unusually smart and well read person for the reason that his KYC docs had date of birth errors. Mishraji should have taken steps to rectify them at the earliest.

Ravindra Malve

4 weeks ago

Thanks Moneylife for helping them....

Most questionable part is why SC took so much time and didn't intervene strictly while AADHAR,PAN,MOBILE linking was going on??? They gave free hand to all during that period to exploit Indians. Was it deliberate????

Suketu Shah

4 weeks ago

This is the way life continues in India since 70 yrs plus when you have a man like Jaitly as FM.To solve such chronic issues of open fraud in the banking system you need Dr Swamy as FM but this wl not happen as he is honest.You also need moneylife advising MOfinance with Dr Swamy as FM and all these issues wl be solved from the root in a few months/yr countrywide.

The will to prevent banking frauds not there due to wrong person as FMinister and not Dr Swamy.

P M Ravindran

4 weeks ago

I am glad that MLF has put its finger at the right sore spot-failure of regulators and grievance redressal systems. I would like to bring in a little more clarity by highlighting the fact that the ultimate grievance redressal authority is the apex court and we should know how the judiciary as a whole is the ultimate example of a totally failed, wayward and whimsical organisation.

Amoung the comments I also found one that blames politicians who 'surely do not wish to bring about any judicial reform because they stand to gain the most from an inefficient and corrupt legal system'. It is true that our elected politicians are in the driver's seat of governance but we have seen how a few judges of the apex court invented a new meaning for the term 'consultation' and usurped the powers of the Executive to appoint and transfer judges and more recently how they trashed a duly enacted National Judicial Appointments Commission Act.

Readers are invited to read my blogs at http://raviforjustice.blogspot.com/2011/02/reforming-our-justice-delivery-system.html, http://raviforjustice.blogspot.com/2011/04/crime-of-non-governance-and-quasi.html and https://raviforjustice.blogspot.com/2018/12/an-open-letter-to-chief-justice-of-india.html

REPLY

Meenal Mamdani

In Reply to P M Ravindran 4 weeks ago

Thank you for referencing your blogspot.
I am not well versed in legal matters but can see from your extensive writing that you are.
I hope that citizens like you can band together to reform the legal system, one reform at a time.

Harish

4 weeks ago

Fully agree with what you say about the Banking Ombudsman.

Ramesh Jaradhara

4 weeks ago

Operational Risk is a major risķ that the banks faces with the burden shifted to the customers to bear. Banking institutions did not pay much attention to the operational breaches that they make and eventually, customers have to suffer.

Meenal Mamdani

4 weeks ago

I would not rely on changing the mindset of Indians. Moreover the Indian mindset is miraculously changed when these same Indians live in a country where the rule of law is applied without bias and in a timely manner.
Here the wrongdoer is assured of years of litigation where the poor person keeps paying the lawyer while the case drags on and on.
The pols surely do not wish to bring about any judicial reform because they stand to gain the most from an inefficient and corrupt legal system.
Perhaps our only hope is a public spirited organization like ML Foundation which could take judicial reform as its main focus.

Anand Vaidya

4 weeks ago

When you have a media-starlet and then a hermit-crab as RBI guv, is there any hope of any improvement? I know you guys (MoneyLife) have been crying hoarse for consumer charter, better consumer protection and service levels from banks, but didn't happen. Now we have a puppet as Guv. He will keep ML busy :-(

Gurudutt Mundkur

4 weeks ago

Whatever our PM may say, it is impossible to stop frauds and bribery at the lower levels. People will continue to have problems like those stated above --- you and I cannot expect the avaricious employee, [whether he is a policeman, a bank clerk or a clerk in the Municipality or a middle manager in a Bank] from losing an opportunity to make money.
The mindset [vritee] needs to change, which is way too much to expect.

Lok Sabha passes Consumer Protection Bill 2018
The Consumer Protection Bill 2018 was passed by the Lok Sabha on Thursday amid slogan shouting by the Opposition.
 
Moving the Bill for its passage, Union Minister for Consumer Affairs Ramvilas Paswan said the Bill was non-controversial and was in the interest of the consumers.
 
He said the Bill, which seeks to establish authorities for timely and effective administration and settlement of consumers' disputes, is above partisan politics.
 
The Minister said that a penalty provision has been incorporated in the Bill, but does not envisage jail terms.
 
The Bill was passed after an hour-long discussion in which 11 members from different political parties participated and presented their views.
 
The Bill was introduced in January during the last Winter Session of Parliament.
 
It seeks to replace the three-decade-old Consumer Protection Act, 1986 and seeks to set up a Central Consumer Protection Authority (CCPA) to "promote, protect and enforce the rights of the consumers".
 
Participating in the debate, Trinamool Congress' (TMC) Pratima Mandal demanded that celebrities be restrained from endorsing any product.
 
"The celebrities or endorsers may also not be able to understand the scientific compositions of the food products and the science behind the claims. Therefore, to deal with the situations like these it may be a better option to ban celebrity endorsement completely," she said.
 
The Bill also seeks to provide Consumer Disputes Redressal Commissions at national, state and district levels to look into consumer complaints.
 
She said the Bill empowers the Central government to appoint members to this commission but does not specify that the commission should have a judicial member.
 
"If the commission was to have members only from the executive, the principal of separation of powers may be violated. The Bill confers power on the Central government to appoint and remove members and provide conditions of service for members of the district, state and National Consumer Disputes Redressal Commission," she said.
 
Biju Janata Dal's (BJD) Tathagat Satpathy said that power to appoint members into the commission at the district and state levels lies with Central government which will be an attack on the fundamental structure.
 
Consumer Protection Councils will also be set up at the district, State, and national level, as advisory bodies. Consumer mediation cells will be set up on the same lines.
 
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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COMMENTS

Sunil Kumar

4 weeks ago

Public opinion Lijiye Jo channel free-to-air the unko mana karte thaa jabardasti abhi bhi de rahe ho 130+tex kahan se ho gaya sabse pahle Agar mai
200 rupay Mein Jaan Si Aa Jaye Jab Koi aa gaya bahar se new channel chahiye ke aage rishtedari se Cartoon Network siste kahan se ho kya bole

P M Ravindran

4 weeks ago

I have had some of the most horrible experiences in the consumer 'courts'. To begin with, it was a reasonably good pro-consumer law. I remember having got Rs 100/- as compensation from the railways (awarded by the District Forum at Indore in the early 1990s) for their failure to confirm reservation of berths for onward journey. But then after seeing the functioning of the district forums at Palakkad and Thiruvananthapuram and State Commission at Thiruvananthapuram, followed by the National Commission at Delhi, I have seen how those tasked, empowered and paid to enforce the law have subverted it most blatantly. Two instances are narrated in my letter to the then President, Dr Abdul Kalam, under the title 'Access to Justice'. It is available at http://raviforjustice.blogspot.com/2012/02/access-to-justice-stake-holders-report.html. The case of Mobilgas is a must read would be an eye opener.

Explicitly in the matter of consumer grievances, please read my complaint to the then Chief Minister of Kerala and the reply by the President of the District Forum, Palakkad. These are available at http://raviforjustice.blogspot.com/2011/11/chief-ministers-contact-program.html and https://www.slideshare.net/raviforjustice/complaint-cm-contpgmconsumerreply011211 respectively.

Chandigarh Police Arrested Two, But the NRI Is Still Waiting for His Rs1.33 Crore Withdrawn Fraudulently; No Help from RBI or Bank of India
Dr Ajay Sood, a non-resident Indian (NRI) based in the US has been given the run-around for over four months by Bank of India (BOI) after he found that Rs1.33 crore had suddenly vanished from his account. Today, the Indian Express reports that the police in Chandigarh had arrested two people who are allegedly members of an interstate gang. But what about Dr Sood’s money? Not a small sum, but a whopping Rs 1.33 crore? The case exposes the pointlessness of Reserve Bank of India's (RBI's) rules to protect consumers from digital fraud, if Dr Sood is kept hanging for months when BOI is fully aware that he is not at fault.  
 
RBI, after long campaigning by Moneylife Foundation had finally cleared the rules governing digital fraud which require the money to be credited instantly. However, Dr Sood is still waiting for his Rs1.33 crore to be credited, despite repeated appeals to the RBI governor’s office, the deputy governor, the chief general manager (Customer services) and a persistent follow-up by Moneylife Foundation’s counselling cell. All he has are emails and assurances from BOI that money will be credited to his account.
 
What is all the more shocking is that this case pertains to a fake Aadhaar being submitted to the Bank on Dr Sood’s account. The investigating officer from economic offences wing (EOW) of Chandigarh police told Dr Sood about the change in his mobile number and submission of Aadhaar on 11 May 2018. Despite the fact that being an NRI, he is not required to have an Aadhaar. But before we go into it, some background.
 
As reported by Moneylife, this amount was withdrawn from Dr Sood's account in BOI, even when the original cheques are still with him. He also found that his registered mobile number was changed and an Aadhaar number, which he does not have, was added in his account details in the Bank. 
 
Dr Sood found that Rs98 lakh from his account were transferred to one Sachin Yadav from Gurgaon and Rs35 lakh to one Mukesh Thakur from Ujjain.  Dr Sood claims that these two individuals are not being questioned by the police or the Bank. In fact, he says that the Bank official kept insisting that someone known to him would have done the transactions while strongly denying any involvement of Bank employee/s. 
 
Moneylife Foundation took up the issue with RBI and BOI. We asked Dr Sood to fax, email and call the RBI governor’s office. Each time, he was directed to some other department. Interestingly, most calls to RBI’s customer services department are not answered or lead to little action. Moneylife Foundation’s credit counselling cell also raised the issue with RBI and BOI. After these efforts, on 1 October 2018, NK Das, assistant general manager at BOI's Chandigarh branch told Dr Sood that the payment (credit) was under process. 
 
"We request your kind reference towards your complaint of unauthorised withdrawal of Rs1.33 cr. from your SB a/c 6*************9 with our branch. We wish to inform you that the matter of payment of this amount to you is under process and will take some time. You are requested to kindly bear with us for some more time," the AGM had stated in an email to Dr Sood.
 
However, till date, Dr Sood has not received his money. In fact, four weeks after promising to return his money, he was asked to submit original cheques. “I have sent the cheques to my attorney in Chandigarh to share them with the bank without handing them over as I do not feel safe giving them the original cheques,” Dr Sood had said. 
 
According to a report from Indian Express, Chandigarh police have arrested Mahesh Malli and Rajesh Upadhaya from Ujjain in connection with the fraudulent withdrawal of Rs1.33 crore from Dr Sood's bank account. The police said the two are the members of an interstate gang, which was involved in fraudulent transfers of crores of rupees from several bank accounts in Gurgaon, Delhi, MP and Punjab. 
 
In Chandigarh, the involvement of the gang was came to light in two cases in which the gang members withdrew around Rs 1.87 crore from the accounts of Dr Sood and from the account of one Sulakshana Devi, a retired government employee, in July 2018.
 
Earlier, the police arrested four men—the owner of Bablu Cycle Services, a franchisee of a leading cycle brand in Mehidpur in Ujjain, Mukesh Kumar, along with Sachin Yadav of Gurugram, Satish Yadav of Mahendragarh in Haryana, and Avinash Prajapati of Ujjain—in this connection. All four are currently lodged at Model Burail jail, the newspaper report says.
 
Police sources told Indian Express that the mastermind of this gang is still absconding. The mastermind, whose identity cannot be disclosed, used to pay them commission ranging from Rs50,000 to Rs3 lakh. People arrested by police were aware of the fact that their bank accounts were being used in the crime.
 
Quoting Sukhraj Katewa, deputy superintendent of police (DSP) in the EOW, the report says, “Police investigation reveals the gang members used to clone the confidential details of account holders. Cloned details included the procuring duplicate cheque books and the signatures of account holders. In the case of Dr Ajay Sood and Sulakshna Devi, accused procured the duplicate cheques of the NRI doctor and woman, and transferred the amount in two instalments with fake signatures of the complainant. The mastermind of the gang is still absconding. We are also verifying the role of Bank of India staff members. So far, no involvement of bank employees has come to light.”
 
Dr Sood had a joint account with his mother and brother in BOI. In December 2017, as per their mutual agreement, the account was transferred in Dr Sood's sole name as non-resident ordinary (NRO) account. This account had all the lifetime savings of his mother as she wanted him to care for her in her old age. Dr Sood continues to have in his possession the chequebook issued at the time when the NRO account was opened. 
 
However, while checking his statements on 20 July 2018, he found that there were two withdrawals of Rs98 lakh and Rs35 lakh using cheques from his NRO account. To his utter shock, he found two cheque numbers from the chequebook in his possession in the US that were used to withdraw Rs1.33 crore. Dr Sood says he neither shared the cheque numbers nor any cheque with anyone. Yet, Rs1.33 crore were withdrawn from his bank account in Chandigarh.
 
After speaking with an official dealing with NRI accounts, he filed a complaint with the bank manager in Chandigarh. 
 
By engaging a local lawyer, Dr Sood, on 10 August 2018 also filed a first information report (FIR) with the EOW of Chandigarh police. 
 
Talking about linking of Aadhaar with his bank account, Dr Sood, had told Moneylife “The Aadhaar card apparently has the same picture as my bank records. It states name of my father as Surender whereas my father's actual name is Dharam Inder. I have no Aadhaar card linked to my bank account since NRO accounts do not have such a requirement. I do not know if they used a PAN card, and whether that corresponds to the one in my bank records. There was a fraudulent communication with the bank in my name via a non-registered email before a bank official approved transfer my funds. Someone was aware of my account balance since almost the entire amount was transferred.” 
 
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COMMENTS

Meenal Mamdani

4 weeks ago

I totally agree with your assessment.
While the majority of bank employees are individuals with integrity, there are a few bad apples who are protected because they are related to someone higher up the chain of command.
Banks should create a redressal policy online such that if the money is not returned within the stipulated period, then a hefty interest rate should be added as penalty. Also the person sitting on the case without resolving it is penalized both monetarily and administratively.

Parimal Shah

4 weeks ago

This is possible only with bank staff connivance. Staff knows which accounts are dormant and how to change registered mobile number and must have guided the goons to perform the trick. The uncaring attitude of the bank also corroborates this possibility.

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