RBI and SEBI: Post-office Regulators and the Art of Closing Complaints without Inquiry
On 16 October 23, I was surprised to receive a letter from the Reserve Bank of India's (RBI’s) centralised receipt and processing centre (CRPC) acknowledging a complaint that I had ostensibly made against Canara Bank and providing me with a tracking number.
The letter claimed that I had filed a complaint with the ombudsman, either through a letter, email or RBI’s complaint management system (CMS) and that I would get a response after the ‘maintainability of my complaint or otherwise’ was decided.
This was surprising, since I had not made a complaint to the ombudsman. In fact, I had written an email addressed to several persons at RBI’s customer education and protection department (CEPD), separately to deputy governor (DG) Swaminathan Janakiraman, and a query was also addressed to RBI’s public relations officer. Each of these emails had sought clarification on a serious matter about some public sector banks (PSBs) finding ways to impose charges on basic savings bank deposit accounts (BSBDA) and Pradhan Mantri JanDhan Yojana accounts (Jandhan accounts) which are aimed at economically weaker sections and promise certain free services, subject to restrictions (mainly on number of debits). One of the banks doing this, I learnt, was Canara Bank.
I was following up on the extensive work done by an ex-banker Chandramouli Mohan of Bengaluru since 2021, based on a research paper by Prof Ashish Das from the mathematics department of IIT Mumbai. But more about this later; suffice it to say that my queries were ignored, just as Mr Mohan’s emails had been ignored or had received evasive replies in the past.
Now, look at the mischief done by RBI. The CEPD or the DG’s office is fully aware that my email queries addressed to them and were not a complaint. They did not meet the criteria for filing a complaint with the banking ombudsman, since I am not a customer or account-holder with a grievance against Canara bank.  Moreover, there is a process to be followed before approaching the ombudsman. You have to make a formal complaint to the bank’s nodal officer, wait for four weeks and then escalate the matter to the ombudsman. Why then did RBI forward my complaint to the ombudsman? The obvious conclusion is to shirk responsibility and ensure that the query is closed as ‘non-maintainable’. If I were to file a Right to Information (RTI) query, the department can honestly say it had acted on my email.
I had specifically addressed the DG, Mr Swaminathan, after reading his speech to bank executives in September. He sermonised that “Banks must ensure their employees understand that the primary responsibility is to serve a customer’s financial needs, while maintaining a focus on targets.” He stressed the need for a “customer-centric approach, addressing the root cause for complaints, importance of resolution at first point of contact, responsible handling of complaints.” Ironically enough, he had said that “some banks adopted an innovative way to classify certain complaints as queries, resulting in ignoring the problem” and that RBI would take stern action against banks hiding the truth and ‘engaging in such practices’. That is exactly what RBI’s CEPD did about my queries.
Given my experience (not for the first time), isn’t it fair to conclude that banks are learning from the regulator how not to engage on consumer issues? Who else but the regulator can investigate and clarify whether banks are, indeed, flouting several clear instructions by the finance ministry about charges?
Now, let’s look at the market regulator, but before that, I must clarify that both regulators are selective in stonewalling queries – they answer what is convenient and, at other times, act like a post-office.
The SEBI Story
Social media is already full of stories about the Securities and Exchange Board of India (SEBI) closing complaints without explanation. The securities appellate tribunal (SAT) has also noted that SEBI behaves like a post-office (Read: SAT Confirms That SEBI’s SCORES Acts Like a Post-office. What Next for Investor Grievance Redress?), which could have some serious consequences for whistleblowers. Here’s what happened with me.
On 27th February, I emailed SEBI’s whole-time member (WTM) forwarding a pamphlet of a Pune-based company running an illegal, un-registered portfolio management scheme (PMS) offer extraordinary returns ranging from 5%-8% a month for investments ranging from Rs25,000 to Rs1 crore. It was brazenly guaranteeing a return of 60% to 100% per annum, based on the sum of money invested. 
I didn't hear from SEBI and forgot about the email until I received a letter from the economic offences wing (EOW) of the Mumbai police saying they had received my complaint, but asked me to file it with the Pune police, since the entity concerned was in their jurisdiction.
Astonished, I thought I was the victim of impersonation, once again. So I sought the help of a colleague to get the details and discovered that SEBI had forwarded my email to the police with a covering note, making me the complainant. Its letter said the Pune ‘entity’ was running a ‘fraudulent operation’ by offering advisory services in investment planning, PMS, advisory, etc, without SEBI registration, and asked the police to proceed against it under provisions of the Indian Penal Code (IPC).
Fraudulent PMS and investment advisory services are usually linked to registered brokerage firms for their market transactions, as in the case of Anugraha Stock & Broking Ltd. But SEBI chose to pass the buck to the police, who are more heavily burdened with complaints and also do not have the expertise of a specialist regulator about market regulations and processes. Its action also exposed and could have endangered the person providing feedback and market intelligence.
Fleecing the Weakest Depositors
Now, let us look at the matter that I raised with RBI. Prof Das, through his research, had found that nine banks had been charging Rs5 plus GST to economically weak individuals with BSBDA and Jandhan accounts when they exceeded a minimum number of debits per month. UPI transactions were allegedly treated as debits (applicable to ATM withdrawals), despite a clear government notifications that UPI transactions cannot be charged. The National Payments Corporation of India (NPCI) has emphatically confirmed this position.
Remember, State Bank of India (SBI) had quietly admitted to such charges and even refunded over Rs90 crore collected on digital transactions since 1 January 2020, before stopping the practice. Indian Overseas Bank had made a similar statement. After I took up the issue in November 2022, Canara Bank put out a tweet that it had stopped levying a charge ‘effective 1st October 2020’. My article mentioned how Prof Das had discovered a stealthy manner in which charges were levied when the number of debit entries exceeded four per month. (Read: Under RBI’s Lax Attitude, Banks Face No Consequences for Flouting Rules).
Since 2021, Mr Mohan had followed up on Prof Das’s research by writing to the banks, to RBI’s CEPD and also filed complaints with the government grievance portal CPGRAMS and, finally, RTI queries seeking that Canara Bank should be asked to return unjust collections. Mr Mohan alleges that the bank has collected over Rs200 crore from Jandhan and BSBDA account-holders – a sum that is large enough for the finance minister to take notice. After all, the Union Cabinet has already approved of a Rs2,600 crore incentive scheme to promote UPI transactions and Ru-Pay debit cards in January 2023 (https://pib.gov.in/PressReleasePage.aspx?PRID=1890314).
Such unjust charges also militate against all the financial inclusion programmes and promises made by the government. Instead of providing clarity on the issue, especially when Mr Mohan had provided screen grabs of bank websites listing these charges, RBI chose to stonewall the issue. Worse, it came up with a strange ruse to close the queries without an answer.
If regulators think they are not answerable to the people and adopt such tactics to avoid action, can one expect any better from the entities that they regulate, lecture to and penalise? Our regulators set an example with such callousness and get away with it, because their administrative ministry and the joint parliamentary committee for finance, which is supposed to oversee them, just as aloof from the people as regulators sitting in ivory towers and bhavans.
Dilip Modi
4 months ago
I am facing a similar situation with RBI CMS for a complaint against a bank, unceremoniously closing a complaint without cause or evidence, flouting the rules laid out in the New Integrated 2021 Scheme and closing the door for appeal too. Writing to BO, DGMs in BO's office does not elicit any response. Under the circumstances, what option do I have - consumer court? High court? or just give up and accept that Indian Goliaths are too big for a lone David.
4 months ago
Even CPGRAMS also acts like post office and closes the complaint/grievances unilaterally.
Replied to natrajan2507 comment 4 months ago
Agreed, and does not scrutinize the complaint but accepts the submission of the company against whom complaint is filed
Replied to MAHENDRA KALANTRI comment 4 months ago
The best joke is that it registers the complaint and after 3 to 4 days disposes the complaint.
4 months ago
Seriously? SEBI is a joke at this point.
4 months ago
The PMOPG is the biggest joke, which is acting as a post office & making fool out of everybody. They categorically state that no records are maintained & no RTI will be entertained. The point is then what is the use & credibility of the system & why the PMO should be sincere & honest in their approach in handling the complaints of the people & ensure that people have faith in the system. However, once in a while some case is taken up & stories put up in the media everywhere to show off how beautifully the PMOPG is operating. These eyewashes are like rubbing salts in the wounds. Why cannot the PMO have experts in various fields who examine the complaint & then forward to the relevant official & then the reply is examined by them so that there is complete accountability in the system. Failing this complaints are just closed without any result. Everyday a new low is touched but then nobody seems to care & for this reason the nation continues to suffer.
Replied to rajiv.pec comment 4 months ago
".....no RTI will be entertained," you say? They can't refuse to entertain an RTI application when filed. At worst, they may delay and deny the required information to the extent of outrightly lying. Glad if you could recall any instance of the PMO refusing to receive an RTI application.
4 months ago
SCORES REQUIRES TO TAKE ACTION BUT IS AFRAID FOR REASONS BEST KNOWN . The brokers are very powerful and it seems that citizens will have to ask the government to have a new authority which will act
4 months ago
I agree with the article.
RBI doesn't investigate and the ombudsman and RBI CRPC are only interested to dispose of the complaints and are afraid to take action
Kamal Garg
4 months ago
No body at any government department including regulators like IRDAI/SEBI/RBI/TRAI or any other regulator ever reads any complain with patience so that they can understand the content and take corrective action. Most of the time it is not responded or just ping-ponged to some other department/section with no follow up and meaning.
4 months ago
Thankyou mam for keeping aware of everything so important always ????????
4 months ago
Sending any email and receiving proper, to the point answer from the opposite party is a rare case. I had sent some emails to BoB and YES bank. I really wonder whether the opposite parties properly read the mails and try to understand the issues. Instead some stereotype reply is given. For example, I have been following up with BoB to allow opening a Fixed Deposit account online in joint names. There are other banks who allow this. But BoB never gave any reply. Only once they requested me to go to the nearest branch for opening joint FD. While opening savings account, YES bank had assured to provide pass book which was never given. To my latest mail on this, the bank replied that the passbook printer is down and they are looking into the issue. After sending a mail to Star Health questioning the 68% rise in my mediclaim renewal premium, I was informed about various benefits instead of properly explaining the hike. If a mail is specific, there cannot be communication gap. But it is happening.
4 months ago
The Bank in question, Canara Bank, is famous for its callous approach. My application for KYC and change of address is still pending with them for the past 6 months. Each time I go to check, one new Johnny will be at the desk and he will pretend ignorance of my application and ask for fresh set of documents and consign it to posterity. The bank wants to show that they make profits not by operational efficiency but by looting the customers. Less said the better about RBI & SEBI. Both are ill equipped to handle any query and pass the buck.
4 months ago
Horrible state of affairs. What the heck the regulators of regulators are supposedly doing when so much loot and plunder in broad day light was going on? When the institutional regulators, designated and meant for the job don't want to do it, how the police, ill-equipped and ill-trained can resolve it? What are we heading for? $5Tn economy?
4 months ago
These ate the best jobs in the world .. RBI and sebi.. no accountability . All perks . Enjoy on taxpayers money . Rbi wakes up when banks are cleaned , money laundered etc
Same with sebi!!
Replied to kpushkar comment 4 months ago
SEBI - Society for Executives of Bureaucratic India.....ha......ha....ha......!
4 months ago
It also depends on who the complaint is against.
Small guys will be taken to the cleaners while BIG fish will continue with a smirk!
4 months ago
Kindly add IRDAI in this list
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