HDFC Bank charges Rs100 per quarter for accessing 'by-invite-only' feature!
Several customers are venting their ire over what they call as 'unethical' banking by HDFC Bank, India's largest private sector lender by assets. Karthik Srinivasan, an old customer of the Bank highlighted the issue in his blog post, which has gone viral on the social media. Karthik and other HDFC Bank customers are opposing the invite only program that they claim, "unethically assumes that you are already in and are willing to pay for it". Unless a customer reads the entire mail and opts out from this offer, she would be charged Rs100 per quarter for availing the Virtual Relationship Manager (VRM) feature. 
 
UPDATED on 10 Feb 2017 to add response from HDFC Bank to Karthik (in the end)
 
Here is what Karthik wrote in his blog post (http://beastoftraal.com/2017/02/01/hdfc-banks-invite-only-program-that-unethically-assumes-you-are-already-in-and-are-willing-to-pay-for-it/)...
 
My first salary was credited to a HDFC bank account. In New Delhi. I have since had HDFC accounts—salary, personal, home loan, car loan, you name it—for over 2 decades.
 
Now, I’m not adding these details to sentimentalize this post. (Oh well, that first salary part is a bit maudlin, I accept!). The point is, there’s way too much banking between me and HDFC that I can’t wash them off if the need arises and move to another bank, without a lot of wasted time and effort.
 
Let me explain what the problem is, first.
 
I received a mail from HDFC Bank on January 30th. The subject said, “Dear Karthik Srinivasan, Welcome to HDFC Bank Preferred Banking Programme!”
 
I get at least 2-3 emails from HDFC every week. All of them ensure that they call me a ‘preferred’ banking customer. This has been going on for over 2-3 years, if I recall right. Now, I have no idea what this ‘preferred’ banking entails. I’m totally open to the possibility that I was shown a laundry list of fine print when this account was opened and I may have signed it too.
 
Anyway, I opened the mail curiously, to know why I’m being welcomed into something that I’m adequately a part of. This was the entirety of that mail.
 
 
Crux: an invite-only virtual relationship manager has been assigned to me.
 
My first thought: Oh great! The once-every-2-years that I actually call someone from HDFC bank can be slightly more easier now!
 
Then, I notice this.
 
 
What?
 
Let me deconstruct that.
 
I was enrolled into this ‘program’ in January 2016. After a year of being in the program that I did not ask to be enrolled into and have no recollection of being in (I did check my emails from 2015, in December, and 206, in January and February, as also emails from HDFC when I had opened this account), I will, from now on, be charged Rs.100 per quarter to be in this program.
 
And, service tax extra.
 
What cheesed me off is not the nominal amount. It was,
 
 
This is an opt-out program.
 
So, I clicked on the link and performed the 2 actions needed to unenroll myself out of this invite-only program that presumes I’m already in.
 
 
 
In simple terms it means, HDFC depends on a customer’s action to not charge him/her. The usual, sane and honest method is, ‘HDFC depends on a customer’s action to charge him/her’. It means HDFC seeks consent to charge a customer. What they are doing is seeking consent to not charge a customer.
 
In other words, HDFC depends on the customer to,
1. open the mail,
2. read through the contents,
3. notice a way to opt-out,
4. click the opt-out link,
5. choose ‘No’ as confirmation and
6. submit the form
… to not charge him/her.
 
If the customer doesn’t perform even one of the above 6 tasks, he/she will be charged.
 
To make it even more explicit, HDFC presented me with the following:
“I, Karthik Srinivasan, agree to pay Rs.100 (plus service tax) per quarter towards the Virtual Relationship Management Programme. Unless I click on the button below to indicate my preference not to be part of this program, I’d be charged for this service.”
 
This is clearly unethical and devious.
 
It particularly hits home for me because I was in Flipkart, handling their corporate communications when they faced a similar issue. Back in 2012, when Flipkart launched the ‘save credit card’ feature (where customers have an option of saving their credit card details for easy payment in the future) after getting a PCI-DSS certification, they rolled out the feature where the check-box for saving the card is checked, by default. This is a classic opt-out tactic that is known to increase sign-ups/uptake of whatever program you are running.
 
It means, customers, who are previously unaware that Flipkart had a ‘save-card’ feature now need to take note of this feature and uncheck that box to opt out of this feature. In other words, Flipkart had pre-decided that customers want to be a part of it. And unless a customer explicitly asks not be part of it (by unchecking the box), they will continue to be part of this.
 
After this service was launched, there was a lot of hue and cry about Flipkart’s unethical practice in rolling out this feature. What was truly admirable, back then, was the fact that Flipkart not only acknowledged this error in judgement and set right the process (to opt-in; that is, give customers an unchecked box and let them exercise the option to be a part of this program, or not), but they also blogged about both the error and the reason why they changed it. Here is the blog, from 2012.
 
HDFC is treading a far more dangerous ground. Flipkart did not charge money from people who forgot to opt out. They merely saved some data without explicit consent. HDFC, in this case, is going to take money from people who may have either ignored the mail, or forgotten to see the message about opting out in the mail. I’m fairly sure there are RBI guidelines that determine that any charge levied on the customer should be done after seeking explicit permission to do so. That is, after explaining to the customer that they are going to be charged for specific services. And not merely inform a customer that they’d be charged from now on for a service and only if they choose not to be part of it, will they be left alone without a charge.
 
The irony is that this HDFC mail starts by calling it an ‘invite-only’ service. The crucial point is that my option to decline the invite hinges on my opening and reading this email fully, and taking appropriate action.
 
I emailed HDFC Bank asking them why this is an opt-out and not an opt-in. I tweeted to them too. I got the following response after 2 days.
 
 
They have merely reiterated the status quo to me – that this is what it is, but hey, we did give you an option to get out of this scheme and about being charged. Tough luck if you didn’t read the mail.
 
You could ask me a question based on ‘caveat emptor’ (buyer beware), which says, ‘that the buyer alone is responsible for checking the quality and suitability of goods before a purchase is made’. The argument could be, I, as a customer, should be vigilant and alert enough to go through all communication from my bank and take note of the charges proposed to be levied on me and communicate my intent to agree or disagree appropriately. This is a fair argument, but let me present how it may look like, in the real world.
 
You enter your favorite, and usual cloth store. You try out 3-4 clothes and decide that you don’t like the fit and decide to try another store. As you walk out, the sales guy calls you back and says that you need to buy them. You ask him why. He says that the price tags in each of the clothing pieces you tried have a fine print that if you try them, you’d need to buy them too. That your trial amounts to a legal contract between the seller and buyer. This is opt-out. If it was opt-in, before you enter the trial room, a store person would have told you the rules and sought your consent.
 
If you have got this email, or recall being in something called ‘Virtual Relationship Management Programme’, please do check your email and take action based on your interest and intent.
 
So, considering all this, and the effort it’d take for me to close *all* my HDFC accounts and move to another bank, I’m not going that route. Instead, I’m going to try another route, to try and make HDFC take responsibility for this lapse in ethics and apologize, not just to me, but in public, to all their customers.
 
I’m going to share this blog every single day for the rest of the year – one day in the morning and the next, in the evening (and so on) on Twitter. And once every week on Facebook and LinkedIn for the rest of the year. I’ll tag relevant people to each tweet/post as necessary to ensure that it is read and understood by as many people as possible.
 
I’m very curious to see if my bank has an ethical stand on this issue at all.
 
UPDATE: The response sent by HDFC Bank to Karthik...
 
Dear Mr. Srinivasan,

Thanks for giving us the opportunity to clarify and apologies for the delay in responding.

With regard to your query, we'd like to humbly submit that the bank has been fair and transparent in the following:
a) giving the customer the opportunity to test the service for free for a year before levying any charges.
b) providing an opt-out facility for those who do not wish to avail of these services, which is in compliance with all regulatory requirements.
c) communicating the charges to customers at regular intervals, in the welcome letter and subsequently in their monthly statements.

You will also appreciate that the benefits of the programme far outweigh the nominal fee of Rs100 per quarter, which is in line with similar premium programmes available in the market. Here are some of the key benefits listed below:

1) A lifetime waiver on locker rentals
2) Preferential pricing for forex, loans and deposits
3) Waiver of non-maintenance charge of average monthly balance (AMB)
4) A dedicated Personal Banker (PB) / Relationship Manager (RM)
5) Unlimited usage of ATMs, both own and other bank
6) Free subscription to in-house e-magazine AAG, a specialised advisory on investments and stock reports
7) VRM- A platform to enhance customer experience and engagement through a 24*7 access to a Virtual Relationship Manager (VRM).

Trust, we have been able to clarify our stand adequately. Needless to say, the bank remains committed to the highest standards of ethics and business conduct.
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COMMENTS

MOHAN SIROYA

1 year ago

Since the present Government and the RB Governor has come, only bank centric rules are introduced by them and the say of a common account holder is throttled . It appears it is done with precision planning and one by one a card is opened and a new rule to aid bankers crops up. First the Prime Minister will cajole and motivate to open a bank account .When it is done, more the merrier for banks to extract money from the deposit holders on one reason or the other. Bank have been given a free hand to introduce any charge for any service or cut the services wherever banks want ,RBI is no more a custodian of the bank depositors. No where in the world, a bank account holder is restricted to withdraw his money from ATM, but in India no more .First a clarion call is given that every one should digitise the transactions. When it is done, instead of getting any incentive ,one has to pay charge who is using the digitisation, beyond minimum number of times prescribed by the banks themselves and not RBI. Then one also has to pay for MQB in the account, money transfer from bank to bank, in issuing D Ds or Pay orders, introduce unheard of high locker rent etc. And the icing on the cake is if bank is guilty of any malpractice or deficiency in service ; noen will reply or take care of it. RBI has constituted a so called CONSUMER EDUCATION AND PROTECTION CELL
( abridged as CEPC). But instead of giving education and protection to the account holder complainant, it gives protection to banks .It disposes the complaint by saying redress at the bank level or Ombudsman will take care of that. Banking Ombudsman is another protective shield for the Banks where the complaints get summary disposal, against which there is no appeal even with the Regulator RBI .So the only remedy available to the Consumers is either go to Consumer Forums or to the HC by way of writ. My own complaint about grave deficiency in service for my savings account in IDBI is a languishing since March 2017 without any accountability at any level. A copy of that was also sent to Moneylife for publication but gone in-vain.Ombudsman schemes and RTI Act or other consumer friendly statutory provisions are being pruned down by the Government in systematic manner . Present ruling party is having a brute majority now in
in Parliament, If any opposition voice is raised it goes the Hindi proverbial way "Nakkarkhane Mein Tooti Ki Aawaz".
I am afraid that it will be no wonder when a fine morning we may get the Consumption tax, fixed quantity for eating at Home etc. in the name of saving food for the.
"Poors". I wish Mr. Srinivasan good luck in his endeavour and we are with him. But let me caution that your right to express in social media is also under scanner and in the process of curb.



Since the present Government and the RB Governor has come, only bank centric rules are introduced by them and the say of a common account holder is throttled . It appears it is done with precision planning and one by one a card is opened and a new rule to aid bankers crops up. First the Prime Minister will cajole and motivate to open a bank account .When it is done, more the merrier for banks to extract money from the deposit holders on one reason or the other. Bank have been given a free hand to introduce any charge for any service or cut the services wherever banks want ,RBI is no more a custodian of the bank depositors. No where in the world, a bank account holder is restricted to withdraw his money from ATM, but in India no more .First a clarion call is given that every one should digitise the transactions. When it is done, instead of getting any incentive ,one has to pay charge who is using the digitisation, beyond minimum number of times prescribed by the banks themselves and not RBI. Then one also has to pay for MQB in the account, money transfer from bank to bank, in issuing D Ds or Pay orders, introduce unheard of high locker rent etc. And the icing on the cake is if bank is guilty of any malpractice or deficiency in service ; noen will reply or take care of it. RBI has constituted a so called CONSUMER EDUCATION AND PROTECTION CELL
( abridged as CEPC). But instead of giving education and protection to the account holder complainant, it gives protection to banks .It disposes the complaint by saying redress at the bank level or Ombudsman will take care of that. Banking Ombudsman is another protective shield for the Banks where the complaints get summary disposal, against which there is no appeal even with the Regulator RBI .So the only remedy available to the Consumers is either go to Consumer Forums or to the HC by way of writ. My own complaint about grave deficiency in service for my savings account in IDBI is a languishing since March 2017 without any accountability at any level. A copy of that was also sent to Moneylife for publication but gone in-vain.Ombudsman schemes and RTI Act or other consumer friendly statutory provisions are being pruned down by the Government in systematic manner . Present ruling party is having a brute majority now in
in Parliament, If any opposition voice is raised it goes the Hindi proverbial way "Nakkarkhane Mein Tooti Ki Aawaz".
I am afraid that it will be no wonder when a fine morning we may get the Consumption tax, fixed quantity for eating at Home etc. in the name of saving food for the.
"Poors". I wish Mr. Srinivasan good luck in his endeavour and we are with him. But let me caution that your right to express in social media is also under scanner and in the process of curb.



REPLY

Pradeep Kumar M Sreedharan

In Reply to MOHAN SIROYA 1 year ago

We badly miss a consumer commission.
That will never be too.
We are looted and silenced because we are unitary.
Banks are advantaged because they are aggregates.
CAN WE TOO AGGREGATE - IN MODERN WORLD IT NEEDS ONLY FLICK OF FINGERS IN A MESSENGER APP

Pradeep Kumar M Sreedharan

In Reply to Pradeep Kumar M Sreedharan 1 year ago

It is no good running away, ie, changing banks.
The system stinks.
We have to challenge from within, having a clean banking service is our basic right. It is the basic right of any society.

MB Singh

1 year ago

Four times I visited the HDFC bank in last month and I see someone complaining for being charged for not maintaining the minimum balance. At the rate of Rs 700 a month as penalty, a balance of Rs 7000 is reduced to nil and after that they also show negative balance. About Rs 18 they deduct as SMS charges for sending one alert message on phone. LOOT!

REPLY

MB Singh

In Reply to MB Singh 1 year ago

Sorry, the SMS charges (Rs 17.25) are for three month period.

Joginder Singh

2 years ago

@HDFCBANK is addicted to robbing customers and showing higher earnings to its FII shareholders (37% foreigner share holding) so the Bank is valued higher every quarter. So called culture of enhancing the shareholders value by fleecing customers was started long back by #Aditya Puri. RMs are known to trick HNI's into worthless schemes and investments where Bank gets hefty kickbacks / commissions from 4.25% - 15%. Bank offers lifetime free credit cards but down the line upgrades to a premium card and starts milkinh 4 - 5000 annual fee, not even opt out options. similar tricks on Debit Cards. Annual fee keeps rising with some new color or logo added on Debit Card and fee can go 10 folds. Same thing they do with Demat Accounts. Most customer's demat accounts from Centurion Bank and other merged entities were rendered useless and the Dividend cheques with account numbers of those dead banks merged with HDFC Bank were dishonored because of mis- match of account numbers ( HDFC Bank will only care about seam less merger that benefits them) but they digged out those customers account numbers in HDFC and start taking the money out - and not in 100's but 1000's. Bank has the mind set that customers have to pay them for leaving the money with Bank and if they want any service, or talk to the Manager (most - they have are Damagers), Bank has the right to take money and do not need any consent from Customer. Customer needs Bank's consent to take their own money out but Bank does not. And RBI sides with #AdityaPuri most times and if one charge is frowned upon, after couple months Bank has a new paid service or product for which they start debiting. They robbed lacks of Bank of Punjab Customers after merger as BoP opened tons of Zero Balance accounts and HDFC Bank started debiting the fee whenever low balance and will take all the money in few quarters. #HDFCBank has a cash of 38000 Crore on its balance sheet, Supreme Court should confiscate that, taking Suo Motto action and return it to the rightful owners whose accounts were drained out without consent, without knowledge and without any recourse available to them.

REPLY

Pradeep Kumar M Sreedharan

In Reply to Joginder Singh 2 years ago

To me, RBI is the Alibaba mothering the 40 thieves and the minister is what - I don't know

Pradeep Kumar M Sreedharan

2 years ago

We as customers have no say in the way the system is constructed, and RBI & Govt exists not blunt our protests, but to kill it by eliminating any actionable forum. That this should happen in the digital age is their powerful statement

B. Yerram Raju

2 years ago

Customer is one who pays when he/she gets into the bank either physically or through internet and not who demands a service he wants!! This is how the Banks redefine their customers post computerization. You call the Bank for a service or enquiry, you are charged! If you ignore the charges first time every second time you avail such service or call you are slapped with the charges. HDFC Bank is not so different from others in this regard. There are 25 types of charges you are debited if you have an account with a PSB and a few more with the private sector newgen banks like the HDFC Bank. Technology should have made banking easy and cheap. Banks should have recovered their investment on technology during th e last fifteen years and yet the customers are fleeced and for not doing a service that they promise. There is no cognizable punishment for non-delivery of a service for which payment is made and so the case even with those services that get into their list. Your complaints, if made only on their template, will get a stereo typed response that if you do not get response within 48 hours, you may get in touch with their customer relations manager. Did you not hear the encomiums paid by the PM, FM, and the RBIto the banks for the excellent service they rendered during the demonetisation drive?

Suketu Shah

2 years ago

In Feb 2013 I gave all papers to close my account permanently.Under some excuse their head of Western region Wealth Management via his influences kept delaying closing of my account.Even after submitting all papers my account was finally closed 1 month later on 1 March 2013.What has been mentioned is correct -this bank makes it almost impossible to close the account via sheer harassment.Think several times before opening an account with them and if you already have an account with them God help you.

Jagadish Kota

2 years ago

I am going to close my account if they don't revert the charges.

REPLY

Joginder Singh

In Reply to Jagadish Kota 2 years ago

They will reverse one charge and come out with a new one. Its their standard practice

Pradeep Kumar M Sreedharan

In Reply to Jagadish Kota 2 years ago

Fight from within, don't quit please

Jagadish Kota

2 years ago

I am going to close my account if they don't revert the charges.

Hemal Mehta

2 years ago

Charging for a opt-out scheme is a day light robbery.
I have closed my wife's account and will be closing my mother's account pretty soon.
RBI should make a rule that not a single rupee be deducted from bank account for any bank charges unless, the bank has a written communication from the customer. Auto debit for new charges should be banned.
The money in the bank account is of the customer and not of the bank.

REPLY

Joginder Singh

In Reply to Hemal Mehta 2 years ago

Its the customer who has to fill out forms to withdraw their own money. Bank does not have to do any such thing. They have free access to this free money. Direct debit should require the consent from Account holder but here @HDFCBANK considers itself the rightful owner of the account and not the Custodian of the Account.

Pradeep Kumar M Sreedharan

In Reply to Joginder Singh 2 years ago

Your deposit isn't your money anymore, Bank owns it; you just have a claim on the amount, that's all

Shobhit

2 years ago

This is a CLASSIC case of daylight robbery by a so called CLASSIC Bank. How can someone steal my money from my bank account with a frivolous OPT OUT OPTION.

Chirpy

2 years ago

I closed my account when HDFC Bank did this sometime last year ( if I remember right ) ... don't have the patience or the time for a bank that one cannot trust.

REPLY

Pradeep Kumar M Sreedharan

In Reply to Chirpy 2 years ago

I took an alternate bank account and is fighting HDFC from within. If I am unsuccessful, at least, it proves that the system is rotten - including the Govts.

Om Prakash Arora

2 years ago

I also received similar mail for being in their Classic program.When I decide to opt out after clicking on the link in the mail and to be doubly sure, also talking to personal banker,who advised me to record objection on line after logging in .Thereafter I received a call from personal banker asking for reason of opting out. When I said that I do not want to pay for the service that I do not need ,she agreed to reverse the charge when levied.I wanted it confirmed over e mail and to be valid for all times in future. I have now received the confirmation.
The experience which caused lot of waste of time n leaving an impression that Bank wanted to fleece .
Few years back they has a similar charge levied on the ISA account opened for the customers which was free to begin with.

REPLY

Joginder Singh

In Reply to Om Prakash Arora 2 years ago

They offer Free for Life Credit Cards but without Customers consent, they will mail out a upgraded card and if you use it, you have accepted the annual fee of few thousands that goes to increase the Bank's Earning Per Share to keep the Foreigner Share Holders happy. Bank does loot your money but honestly pass it on to their foreigner share holders (37%)

Vidya

2 years ago

In my case also hdfc bank charged Rs.100 per account (I had 5 account) ie 500 per quarter as Programme Management fees for imperia programme which they registered me. I had follow up with them to finally get charges reversed. Most people do follow for such unethical charges and bank benefits and continue do such unethical things. It is clear case of cheating customers who are not alert.

Pradeep Kumar M Sreedharan

2 years ago

Wearing down the customer at CRM level and swindling the less alert (eternal alertness is impossible for the common man, for unlike the Bankers, our lives aren't centered around banking) is modus operandi of the swindlers, the system being installed employing behavioural economics studies obviously.

REPLY

M S Prabhakar

In Reply to Pradeep Kumar M Sreedharan 2 years ago

Can you translate your comment to English?

Suketu Shah

2 years ago

They charged Mutual charges twice also to us in 2011(a significant amount) thinking we wl not notice.We got it reversed and there was no apology also.This is a standard modus operandi in hdfc bank.It is clear this banks best days are behind them.The atmosphere in the bank is so vicious that their employees of hdfc bank strongly dislike each other and make fun of each other rather than working as a team.

Best to avoid hdfc bank and also axis bank.There are better private banks like Yes Bank and ICICI Bank.

HDFC Bank increases cash transactions charges by 50% to minimum of Rs150
Private sector lender HDFC Bank has decided to levy a minimum of Rs150 for cash transactions from 1 March 2017 for all savings and salary accounts. While first four transactions (including deposits and withdrawals) in cash would be free, the Bank customers will have to pay Rs150, excluding taxes and cess, for fifth transaction onwards. With the increase in cash transaction charges, HDFC Bank has withdrawn cash handling charges from March 2017.
 
The private sector lender has also put restrictions on value for cash transactions. For home branch, the customer would be allowed to withdraw or deposit using cash of Rs2 lakh per month. Above this limit, the bank customer will have to Rs5 per thousand, but minimum of Rs150 plus taxes and cess. For cash transactions in non-home branch, for an amount up to Rs25,000 per day, there would be no charges. For cash above Rs25,000, the customer will have to pay Rs5 per thousand or minimum Rs150, excluding taxes and cess. 
 
This value restriction is application for third party cash transaction as well, except that a transaction of over Rs25,000 will not be allowed. For senior citizens and minor account holders, the limit of Rs25,000 would be there, but no charges would be levied, HDFC Bank said in a notification on its website.
 

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COMMENTS

Akhil Jain

1 year ago

Dear team hdfc if the amount is so nominal why are you charging. Had you asked the customer to opt for the services and offered free services for the first year and charges later it would have been ok. But you are taking the customer for a ride by taking advantage of their busyness. If I send you a mail stating that I want 20% interest on my current account from 6 months onwards as I will not avail a few features of my account will it be ok with the bank and will the bank give me 20% Interest. The arguments forwarded by you are simply ridiculous.

RAVI RAM PV

2 years ago

Technology is supposed to decrease the costs of banks. As per multiple Bank CEOs, withdrawal of cash from the branch in person is higher than when one uses an ATM. But, we as customers are yet to see the benefits of technology implementation. These charges are reasonable, provided the banks provide cash-back for using ATM or net banking. But, they don't. This becomes yet another daylight dacoity, the voiceless salaried class will be subjected to.

Demonetisation woes due to bank officers' role: Panagariya
In implementing demonetisation what did not go as planned was that "a lot of bank officials really played it in the way that they should not have played it" and it was on a scale not anticipated, according to Arvind Panagariya, Vice Chairman of Niti Aayog.
 
He defended the demonetisation of the Rs 1,000 and Rs 500 notes calling them a part of an overall strategy to fight black money and to introduce developments like digitisation of currency.
 
"Remember this was not a step taken in isolation," he said. "It sent a very strong signal, 'Look the government's strategy is to combat the black money'."
 
He was answering students' questions after a lecture on India's economic policy and performance organised by the Deepak and Neera Raj Centre on Indian economic policies at Columbia University's School of International and Public Affairs.
 
"It is a gigantic operation," he said. "Those who have been critical of the RBI have not understood what a gigantic task it was to remonetise the economy.
 
"The money that was completely out of the system, a substantial part of the cash that was in circulation was not in circulation, was not in the formal economy," he said. 
 
"A lot of these the RBI (Reserve Bank of India) knew was not coming through the banking system at all. So they all needed to come back.
 
"Demonetisation sends a very, very strong signal that the day when the central government was complacent was over, that if you are going to misbehave we are going to see to it that you pay for it," he added.
 
The demonestisation is being followed up by a number of other things like restrictions on contributing funds for elections, and "the digitsation of the transactions, big time," Panagariya said. "So all in all it was a necessary step in the process."
 
He also praised the RBI for the "admirable role" it paid in keeping the rupee stable in November through two international developments - Brexit and the election of Donald Trump as the US President - that made an adverse impact on most developing country economies.
 
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

Kunal Singh

2 years ago

What does he even mean by “a lot of bank officials really played it in the way that they should not have played it”? Weren't the banks being played by continuous directions and notifications from the North Block and Mint Street? Was it the bank officials who were responsible for printing and circulating money or is it the RBI which is the authority responsible for this exercise?

The banks worked overtime and on holidays while the RBI (holy be thy name) enjoyed their holidays. Currency Chests filled with specified bank notes and there was no sign of the new notes making its way to the banks from the currency press. The MoS Finance apparently instructed banks to open currency chests overnight. Who's clueless here?

The goals were conveniently shifted from black money to digital. A former RBI Governor said on record that he wouldn't take up the job in the current environment. Trump's election win saved Govt the blushes of DeMo.

Where's the black money? The pseudo-intellectuals gave a huge bounty of dividend from the RBI even as the DeMo exercise was underway. Alas, it looks like Central Bank accounting doesn't work that way.

Gopalakrishnan T V

2 years ago

Implementation has miserably failed is a fact which cannot be ignored and which ever institutions have failed to implement needs to be fixed mercilessly. Lots of expectations were there from Demonetisation and a casual approach to implement the same defeated the whole purpose of it.

Pradeep Kumar M Sreedharan

2 years ago

My apartment, out in the market since September fetched only two enquiries, that too after Dec 31st, both from bank staff - strange, I said and strange it is.

jaideep shirali

2 years ago

Quite obviously, Mr Panagariya, like all the concerned Ministers and bureaucrats, RBI or otherwise, is clueless about the DeMo exercise. Maybe a simple calculation should have helped him. A day's bank strike costs the economy between Rs 25,000 to 50,000 crores loss. Multiply that figure by 50 and even compared to Rs 15 lakh cr in currency, it shows how stupid the exercise was. Goalposts shifted, even till now, as each goal was evidently ambiguous. Add to that the cost of printing new notes, recalibration of ATMs, logistics cost and the fact that the Govt was short of currency notes from Day 1. And yes, the innumerable rule changes by people who think they knew all but are ignorant. DeMo is a failure, but bureaucrats like him will continue to get their DA hikes and benefits, how does it matter who is affected ?

REPLY

Govinda Warrier

In Reply to jaideep shirali 2 years ago

I'm reminded of Kapil Sibal of 2G SCAM days. He used to multiply any alleged loss to GOI by zero! Now demonetization loss is equal to number of days since November 8, 2016 multiplied by "X" where X is number representing my enemity to....

Beena Kothari

2 years ago

Who can say with confidence that this entire exercise was successful? No one not even govt officials with the proof.. Now the data analysis by the IT department is going to create another set of problems for commoners.. Black money still remains illusive and only for talking reference.. Most of the hoarders have gone laughing away...

Rahul Pande

2 years ago

Very interesting.A bad workman always blames his tools.

S Santhanam

2 years ago

In a way to put restrictions on withdrawal by RBI or government does not stand the test of the courts. In other words such instructions are illegal.

S Santhanam

2 years ago

When you are given a loan by a bank it is expected to be repaid either on demand or as per terms of loan contract agreement signed by the borrower. Similarly if a customer deposits money in his savings account it is a contract signed by the bank to the customer that it will pay
any amount to him or her to the
extent of balance available in the account. It is similar to the customer lending his money to the bank on conditions mutually agreed upon.
Now to put conditions for withdrawal of money from
the savings account is violation of the contractual obligation by the bank and it should compensate the customer by paying higher interest on the savings account. Mutadis mutandi it is applicable to current accounts too.

S Santhanam

2 years ago

When you are given a loan by a bank it is expected to be repaid either on demand or as per terms of loan contract agreement signed by the borrower. Similarly if a customer deposits money in his savings account it is a contract signed by the bank to the customer that it will pay
any amount to him or her to the
extent of balance available in the account. It is similar to the customer lending his money to the bank on conditions mutually agreed upon.
Now to put conditions for withdrawal of money from
the savings account is violation of the contractual obligation by the bank and it should compensate the customer by paying higher interest on the savings account. Mutadis mutandi it is applicable to current accounts too.

US Vads

2 years ago

It is a thoroughly disappointing reading from none other than Vice-Chairman of Niti Ayog kind of body - highly coloured and absolutely lacking objectivity. It is simple - every task , more importantly a task like demonetisation that destabilises and plays on common man emotions - has to show case the clear cut objectives. This one does not. Till date, the RBI , the internal arm of government, and the government together could not come out with a complete picture what it attained or number analysis like - how much this exercise cost , how much black money out of how many the raids conducted and who are all searched is projected to be entering the exchequer ultimately - let it take decades though. Go to any ATM even now, you just stare at the message that önly Rs.2000 notes are dispensed" and the bankers coldly say "we dont have other denominations" and so on. Is this continued harassment the objective? By saying it is a part of larger set of actions that follow is only to fool the public who just dont have any means to question the government on any inconvenience. Is the goal to have a universe of people as database to target in future? If digitisation is a part of the game, is this the only way to kick start? Today we go to any small time shop keeper or an upcoming clinic, they say it costs 1% + surcharge on the amount swiped - it is real and not fiction like the one we hear from this article. Carry a Rs.2000 note and feel eternally shaky if the merchant would accept or deny for want of change. As against every inconvenience one quotes, there is only one answer - it is all to attack the black money! but we see the municipal authorities , police, every government officer who has been given the power to serve you - all of them want bribes and now in multiples of 2000. This is not a political view . we dont care a damn for any party that supports or opposes. The problems in the small rural areas and even in cities at odd places regarding the currency availability is real. Million bullets fired in all directions to hit a bunch cash hoarders who ultimately escaped or would escape in the crowd of common people who received the bullets for no reason - this is what has been achieved. A non-stop political narratives can be spun for another few years around this act - this another add on. Whom are we blaming - bank officers? the government came up with so many changes every now and then . Will these not cause hardship to people and disruption to the administrative process of the banks? Net , net it has been a big political game causing harm to the innocent public irreparably.

MOHAN SIROYA

2 years ago

Being a part of the Government , it is but natural that Mr. Panagariya is defending demonetization. He did not say how and what way it has helped economy or the common people of India. Although ,he mentions that the Bank Officials did irregularities not expected of them, he has not mentioned what action the Government has taken against such truant
officials. What use this piece ? Is anyone convinced by what he said ?

REPLY

Panna Thakkar

In Reply to MOHAN SIROYA 2 years ago

Yes what Mr Panagariya said is right some corrupt bank officials have done wrong things and it is also true that NPA in banks are because of political hands and these corrupt bank officials but no Govt till date not even Narendra Modi govt has taken any step against them Why Why . The properties & assest should be confiscated instaed the corrupt bank officials have retired and are enjoying pensions . Is Narendra modi listening?

US Vads

2 years ago

It is a thoroughly disappointing reading from none other than Vice-Chairman of Niti Ayog kind of body - highly coloured and absolutely lacking objectivity. It is simple - every task , more importantly a task like demonetisation that destabilises and plays on common man emotions - has to show case the clear cut objectives. This one does not. Till date, the RBI , the internal arm of government, and the government together could not come out with a complete picture what it attained or number analysis like - how much this exercise cost , how much black money out of how many the raids conducted and who are all searched is projected to be entering the exchequer ultimately - let it take decades though. Go to any ATM even now, you just stare at the message that önly Rs.2000 notes are dispensed" and the bankers say coldly say "we dont have other denominations" and so on. is this continued harassment the objective? By saying it is a part of larger set of actions that follow is only to fool the public who just dont have any means to question the government on any inconvenience. Is the goal to have a universe of people as database to target in future? If digitisation is a part of the game, is this the only to kick start? Today we go to any small time shop keeper or an upcoming clinic, they say it costs 1% + surcharge on the amount swiped - it is real and not fiction like the one we hear from this article. Carry a Rs.2000 note and feel eternally shaky if the merchant would accept or deny for want of change. As against every convenience one quotes, there is only one answer - it is all to attack the black money! but we see the municipal authorities , police, every government officer who has been given the power to serve you - all of them want bribes and now in multiples of 2000. This is not a political view . we dont care a damn for any party that supports or opposes. The problems in the small rural areas and even in cities at odd places regarding the currency availability is real. Million bullets fired in all directions to hit a bunch cash hoarders who ultimately escaped or would escape in the crowd of common people who received the bullets for no reason - this is what has been achieved. A non-stop political narratives can be spun for another few years around this act - this another add on. Whom are we blaming - bank officers? the government came up with so many changes every now and then . will these not cause hardship to people and the bankers. Net , net it has been a big political game causing harm to the innocent public irreparably.

SuchindranathAiyerS

2 years ago

Panagariya blames the Bank Officers. I say Most Bank Officers are Government Officers and, therefore, no different

SuchindranathAiyerS

2 years ago

The demonetization in India was drastic but essential. The vital element of surprise was remarkable. The difficulties arose out of the need for surprise.

For example the new 2,000/- notes, and large quantities of 100s were to be available, with the ATM re calibration done, a month before the Prime Minister's announcement. However the Reserve Bank and the Banking system are as lackadaisical as any other Police Station, Government Office or Court after Seventy Years of Quota-Corruption Raj by the Constitutionally Certified Congenitally Impaired, and took their time. Any time pressure applied on this rusty machinery would have spiked the secrecy.
The Banks, like the RBI became corrupt when they came under the control of the Politicians and Bureaucrats (RBI 1947 and Banks in 1969)
There was an enormous over hang of corruption and other criminal money eliminated by this. The various insurgencies and the Chinese backed Maoist operations have been brought to a dead halt. More importantly, the forged currency being injected by Pakistan and China to destabilize the Indian economy and foment terrorism and insurgency have been wiped out. The most telling demonstration of this is the manner in which the forged currency funded violence and rebellion in the Kashmir Valley came to a dead halt.

There has been a seventy year accumulation of black cash and black cash funded wealth in the country. The ten years of the Manmohan Singh "Coalition Dharma" that enabled the "Family that loots together to stay together" to chalk up scam after scam with enormous profligacy and pork built up a spurious inflation funded GDP without underlying employment or wealth distribution rather like what is happening in the West owing to war profligacy.

Huge non productive capital investments enforced by foreign inward investments with nothing else to buy was drowning the country with excess capacity.

In addition, the inflation funded "wealth" economy had inflated housing out of reach of even the upper middle class let alone the poor.

The enormous private currency hoardings of judges, police men, bureaucrats and other corrupt cogs of the state have also been wiped off.

This will reduce the deficit and release staggering sums for infrastructure, defence, education and health, all of which have been starving during Manmohan's ten years but have been fasting like a Gandhi for sixty years before that.

Remarkably, while the opposition and their paid media make much ado about the inconvenience, the ordinary man on the street is thrilled with this darkness before dawn. They have a better grip on monetary economics than the "Economists". Probably because, unlike the politicians, jounralists and economists, they have been forced by penury to a lifetime of monetary economy.

Despite these enormous advantages, black cash may soon return because the fundamental processes of non accountability, incompetence and corruption that generate this have not been addressed. Nor has the accumulations of black wealth in the form of land, bullion, and precious stones (particularly diamonds) been addressed. But it will take several decades to build up again into the menace that it had become, threatening the fundamental sovereignty of the Nation. This will give Mr. Narendra Modi's Government the time to take even sterner and more long lasting measures that it was mandated to do by the Indian voters in 2014.


The real enemy is India's failed Constitution and Policies that created the Quota (reservations)-Extortion (Corruption) Raj.

India is now home to 30% of the World's poor (World Bank 2016), 135 out of 172 countries in Human and Social Development and 143 out of 172 countries in Internal Peace and Stability (UNDP 2015). For amending this failed constitution and ending the failed policies of the last seven decades, Mr. Modi will require a much larger mandate than a mere Parliamentary Majority.

REPLY

S Santhanam

In Reply to SuchindranathAiyerS 2 years ago

One is doing what is within the reach called plucking low hanging
fruits ...in that respect Modiji did not show that conviction... He could have removed removed donations by cash for political parties. Instead he went ahead making it more opaque by introducing bearer bonds scheme thus protecting both the corporate and the recipient of political parties.

Though a few sting Operations showing political parties helped in currency exchange fraud no action is taken.
Reddy house marriage expenditure reportedly 500 crore rupees . Nothing seemed to have happened to get at the truth.

S Santhanam

In Reply to SuchindranathAiyerS 2 years ago

One is doing what is within the reach called plucking low hanging
fruits ...in that respect Modiji did not show that conviction... He could have removed removed donations by cash for political parties. Instead he went ahead making it more opaque by introducing bearer bonds scheme thus protecting both the corporate and the recipient of political parties.

Though a few sting Operations showing political parties helped in currency exchange fraud no action is taken.
Reddy house marriage expenditure reportedly 500 crore rupees . Nothing seemed to have happened to get at the truth.

Govinda Warrier

2 years ago

As Simple Indian has repeated some 'political' arguments against withdrawal of legal tender status of high value currency notes from November 8, 2016(it was not demonetization), some clarifications may be in order. Whatever be the immediate impact on the economy, mainstreaming of huge quantities of money which was with people before November 8, 2016 will have a long term positive impact on the Indian financial sector. Like money, other domestic assets including gold and jewelry need to be mapped and accounted. There are several areas including agricultural income and real estate, where GOI's own approach is lax. Corrective measures had to have a beginning and ensuring assets held in the form of currency was brought back to banking channel was a right step, in the right direction. It's comforting to see that vested interests could not delay the process. Now, let debates resume and let legislative bodies proceed with corrective measures, wherever there had been lapses in implementation.

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