Banks are ripping off Consumers in many ways. Will PM Modi & Arun Jaitley question them?
Moneylife Digital Team 30 December 2014

There is a growing sense of frustration among bank customers about the constant, stealthy increase in service charges. Strangely, RBI, the regulator is siding with the bank cartel. Will PM Modi and FM Jaitley pay any heed to helpless bank customers?


This weekend, Prime Minister Narendra Modi and Finance Minister Arun Jaitley along with Reserve Bank of India (RBI) Governor Dr Raghuram Rajan, will meet bankers in Pune at a two-day banker’s retreat. PM Modi is scheduled to interact with bankers on 3rd January. The Retreat would try to achieve a broad consensus on what has gone wrong and what should be done both by banks as well as by the government, among other issues. As usual, in such kinds of meetings, the customer or customer services side of the equation does not feature. It is important for PM Modi and FM Jaitley as well senior officials from Finance Ministry to understand and ask bankers present in the retreat, about the treatment meted out to customers and unfair charges levied by them for banking services. Banks are ripping off customers in a variety of ways: charges on automatic teller machine (ATM) transactions, higher debit charges, SMS alerts (that was a security feature initially), minimum balance requirements, ATM and debit card charges, cheque leaf charges, account closure charges, money transfer charges and so on.


However, so far the government has maintained a stoic silence. The regulator, Reserve Bank of India (RBI) has ignored all appeals and memoranda by consumer organisations, unions and non-governmental organisation (NGOs).


Finally, two lawyers have taken the lead in filing litigation — one in Madurai (Madras High Court bench in Madurai  and another at Delhi. The High Courts have taken prima facie cognisance of the issue and issued notices to the RBI and the Indian Banks' Association (IBA). Meanwhile, activist Nutan Thakur and ML Sharma have moved the Allahabad High Court on sale of insurance products by Punjab National Bank. This is also an issue that Moneylife has taken up in the past.


The RBI has decided to back banks’ move to charge for ATM transactions beyond a threshold limit despite protests by consumer organisations and depositors. The RBI has ignored all our memorandums  including the one sent jointly with trade unions and other consumer groups. Will Prime Minister Narendra Modi or Finance Minister Arun Jaitley ask bankers about this?


Even on the single point that was accepted out of Moneylife’s memorandum to the RBI, which was regarding the reporting system for non-working ATMs — the RBI has breezily entrusted it to the IBA, which will have minimal interest in setting up a system that will expose their own warts.


An official, writing on behalf of the Governor, said that RBI would ask IBA to “incorporate ways and means through which customers are enabled to report about ATMs which are not in working condition to the banks.”


Is RBI so naïve as to believe that banks do not know which of its ATMs are not functioning or have not bothered to load adequate cash? When the regulator supports a bank cartel by readily accepting their claims about transaction costs without exploring ways to reduce them, what option do depositors have?


First, the stricter limit on ATM transactions applies to six metros, when in fact, the higher number of transactions should lead to lower costs. Secondly, in-bank transactions, which are much more expensive are not being charged—unless RBI plans to permit those too in the near future.


Interestingly, ATM charges were a subject of hot debate at an Open House session by Moneylife Foundation on 22 November 2014, with its new trustees—TS Krishnamurthy (former chief election commissioner of India), Dr KC Chakrabarty (former deputy governor, RBI) and Siddharth Das, COO of Payment Systems at Flipkart.


Dr Chakrabarty, well known for his brutal outspokenness, had said, “I don’t agree with the institutional view of the RBI… on allowing banks to charge for withdrawals from their own banks.” He demolished the claim that customers must pay for services saying, “If banks want to move to a system of transaction fees to be paid by customers, then they must also be prepared to work at very low interest spread. They cannot pay 4% on savings accounts but charge 12% or more on advances and also charge customers for transactions.”


Contrary to RBI’s belief that service quality drives the customer’s choice of banks, most often people are tied to a bank because of salary accounts, scarce lockers, electronic payments for utility bills, credit cards or loans. It is not easy to cut these strings frequently.


As it is, the decision to charge for services that were free till now, like mobile text alerts and higher charges and increase in debit cards fees, has become a source of irritation and discouraged people from maintaining multiple bank accounts. Angry and suspicious customers want to know why nationalised banks continue to expand their ATM networks so rapidly if transactions are unviable.


Moneylife Foundation had pointed out that there is no system in our country to report non-functioning and 'out of order’ ATMs that we as customers see almost every time we want to use it. This makes it necessary for people to hop around and use other bank's ATM that are working. Another crucial issue is the restriction on money withdrawal. If someone needs, let’s say Rs25,000 but the ATM has withdrawal limit of Rs10,000. In this case, the person would end up making all three permitted transactions in one go.


The decision to permit banks to levy charges on ATM transactions is not, in itself, a move that should shatter consumer confidence. But, by choosing to issue a diktat on what should have been a decision by individual a reciprocal service obligation on banks, RBI has ended up signalling that it does not particularly care about the consumer.


Will PM Modi, who often talks about bringing 'achhe din' for common citizens rein in the financial regulator and the bank cartel from punishing own customers by levying variety of charges while enjoying one of the highest spreads on interest anywhere in the world?


You may also want to read…


Wake Up to Your Bank Charges


Make ‘basic’ banking services free!


ATM Charges: When RBI acts as ‘toothless’ tiger


Jan Dhan: Desi Problem, Videshi Terms

3 years ago
Two days ago I have no recive money
8 years ago
To share a customer-centric article (courtesy- BL):

How to complain in a way that will be heard

Quite useful clues, and being direction-specific, it is for an aggrieved customer to take a conscious note of and follow the best suited. One offered suggestion is "that in the most complicated cases, if customers are ignored on customer service channels, the best way to get the firm to act is to escalate matters to senior executives”. Going by personal experience, however, that may not really work (or ‘work wonders’) in all cases. Consider case of an aggrieved bank customer having a serious complaint of an irregularity or illegality in certain ongoing practice for long, without even a whisper from impacted customers as a class, most of them remaining low-aroused or not to be easily aroused. In such a situation, the common tendency of every ‘senior executive’- for that matter, even the chief executive, mostly gifted with an insensitive and recalcitrant disposition towards customers ,is to prefer the gimmicks of passing the buck and keep dodging as long as possible. Left with no way to bring about a realization by them that the proverbial ‘buck’ must stop somewhere, customer finds no option except to, if so decides, resort to a formal course, but long drawn process, of legal action.
Anyone with like experience who can suggest any alternate but better (-least bothersome) course of action to suggest?
8 years ago
To Update (supplement !):

Latest on ‘profession’ ( RBI)

> Rajan cuts through the RBI fog; tells officials to be professional

>>To anyone frightfully concerned, more so who truly cares to, -valued time and inspiring mind permitting-, give more thoughts, with a profoundly altruistic objective, –

Read HERE:

>>> Living In A World of Professions - SpeakingTree

For more, a handy compilation of related HERE>

>>>> http://vswaminathan-swamilook.blogspot.i...
8 years ago
An Update-
BL reports:
"Banks can now pay higher rates for deposits without premature withdrawal option"

< Viewpoints shared through comment posted @BL ; also on Facebook

Advocate Navneet Sarin
8 years ago
8 years ago
The since published article of a learned lawyer @ ICL Bogs, HERE, - Relevance of the concept of truth-in-lending (Truth in lending: Regulatory Measures in India)may be found to cover certain related aspects; echoing like sentiments/ similar concerns as herein.
Advocate Navneet Sarin
8 years ago
Recently I have noticed, Banks are charging 5%PM means 60% annual interest to Credit Card Holders on outstanding balance. Apart from that they charge Rs.400/- as late payment charges. Which means if you forget to pay an outstanding balance of 200/ after one month that will become 610/- what a nice day light robbery committed by Banks. It appears RBI has closed their eyes or have failed to protect the Bank Customers. Now Govt is giving Credit cards to every Indian, even in villages where all these customers do not have any access to internet or e banking. So all government schemes to uplift the rural poor's will result in whole of their money siphoned off in the name of various banking charges. God bless & save 9.5 crores New Customers of Banking Industry.
8 years ago
To Add-on:
While the poser to the PM and FM has yet to receive any direct or positive answer, the media since reports , -Banks, unions wage talk on Jan 5.

And goes on to say, "...... if the talks fail to resolve the problem, it would go ahead with the strike on January 7 and also the four-day continuous national strike from January 21..."

If were to go by simple common sense, how does one reconcile this development, of course not unfamiliar or odd, hence, as always before most likely to be taken not any seriously but in the stride, with the message to banks given by concerned VVIPS , telling to- "Be socially responsible and commercially viable"

In a lighter vein, - what sense it makes to call the threat as NATIONAL (not, nation-wide; if hesitant to name it -anti national) strike, despite echoing not even an iota of either social responsibility or commercial viability the instant threat portends.

Loudly wondering,- is this not a matter of crucial importance to be suitably taken on and effectively tackled in the ongoing talk, and in the follow-on process expected to ensue, of revamping the labor laws freshly mooted?.
Advocate Navneet Sarin
Replied to vswami comment 8 years ago
The demands of unions is very much genuine. There was a time some 30+ years backs when Bank employees were paid handsomely due to the nature of their Jobs and the risk attached to it. With the passage of time due to high handedness of Finance ministry and unnecessary interference of Governments in pressurizing Banks to distribute loans to un viable sectors in the name of social responsibility the profits of Banks were siphoned off in bi9g way. Due to which the poor employees were made responsible for NPA and low salary increases. On other side Government and other public sector employees were given generous pay rises. The result today a peon in Public Sector/Govt dept is getting far more than a clerk in Bank. And A clerk in Public sector/Govt unit gets far more than a Bank Manager and that too without any risk or responsibility or even work as most of the Public sector is over staffed but banks are understaffed.
Replied to Advocate Navneet Sarin comment 8 years ago
While having no knowledge of the actual/ factual position in regard to 'pay' package /or overall payroll cost in real terms, hence no comment to offer on the reasonableness or otherwise thereof, certainly that is a matter which employees . including high end ones, would be justified in pursuing/persisting in their genuine grouses/ grievances,cohesively and with all the might, to the end of a satisfactory solution.Certainly, however,there could be no denying, that ought not come in the way of or jeopardize customer expectations / satisfaction, resulting in a compromise on the quality/efficiency in service to customers,who really could be expected to have any real or effective, even persuasive, 'say' or influence, in such a matter essentially of internal management / in- house administration.
In any event, those are extraneous to the subject matter of primary discussion herein, mostly founded on principle based rules urged for.
Replied to vswami comment 8 years ago
Sorry ! in the fifth line from bottom, to be corrected and read, - ...who really could NOT be expected..
Advocate Navneet Sarin
Replied to vswami comment 8 years ago
Mr. VSWAMI the problems of excess charging, manipulative terms of service, charging 60%+ interests and other similar problems bank customers are facing apart from poor services are not due to employees. If employees are responsible it can be just 5% the 95% is due to political and corrupt management appointments. Poor knowledge or people with no knowledge becoming Directors of Banks, using public money (Deposits) for vested interests of Governments and political parties. The trend was started in a big way while the Late Mr. Rajiv Gandhi was PM and Mr. Janardhan Pujari was the Minister for Banking. The concept of Loan Mela was the creation of these two people. The other problem is half heart ed regulatory Authority RBI.The best joke in Banking is more corruption is at higher level than at lower levels.
8 years ago
I express my thanks to moneylife foundation for its movings regarding the ATM charges
jaideep shirali
8 years ago
The essential difference in the way banks perceive customers has changed. The MNC bank arrogance has permeated most banks today, private or public. The private banks think that they should be seen as gifts from heaven by their customers, hence they are arrogant. PSU banks do not care, because their survival is assured, irrespective of customer service. What is worse, PSU banks sign away crores of NPAs without anybody punished and recover this loss to some extent through their customers. Banks said they wanted ATMs, they obviously did their calculations, so why are they protesting now? All banks forget that they exist because of their customers, they are not doing a favour to customers by serving them. So why should customers be at their mercy ? We need to have more consumer representatives in decision making bodies such as RBI.
8 years ago
govt is in controll of corporates do not expect any welfare measures
8 years ago
“..will meet bankers in Pune at a two-day banker’s retreat. PM Modi is scheduled to interact with banker...”
'retreat' - with or even without looking up a dictionary, the word, it may be realized, has an ominous foreboding, - is repulsive to / flying in the face of the very objective of the intended meet.
As regards customers' grievances, topping them all but found no specific mention is, the bank's ongoing practice for long but not cared to be looked into and remedied thus far. That is, concerning the unscrupulous charge by way of reckoning afresh, and reducing interest otherwise already accrued due, on withdrawals of own monies in deposit, if done before the stipulated period; and adding insult to the injury, further reduce additionally '1%' of the deposit, The most objectionable part of it is that banks do so, even with no clear cut term / condition stipulated by bank or made known to the depositor at the time of placing the deposit. To be precise, in one such instance, the term/condition as stipulated / disclosed on the face of the account opening form of the bank is so clumsy, and the language distorted to such an extent that it makes no sense, and can have no lawful binding.

For sampling, -
"Subject to such terms and conditions as the bank may stipulate ...make premature payment of the proceeds ... be at liberty though not bound and its absolute discretion , to repay the deposit before maturity , ..." UQ
For the view taken by the RBI Ombudsman himself , that too in a case of foreclosure of home loan, refer, - Bank pulled up for 'deficient documentation' | Business Line
Should that be so, is there not adequate justification / all the more reason why the same logic ought to be applied and followed, when withdrawal is out of , unlike in respect of borrowing by customer, his own monies lying in deposit? Are not the banks, in still, to the contrary, pursuing its own dubious way of thinking / in-house / in-box philosophy, taking advantage of the largely prevailing unawareness/ callous attitude on the part of customers, liable to consequences flowing from the patently wrong practice, in breach of faith and trust ignorantly placed by customers?
Now that the ball is RBI's court, it is for the regulator to take a conscious note of the widely obtaining discontent of the customers and bring succor to the frustrated banking public , with no longer wait.

8 years ago
I do not agree with a single sided representation of facts MD fiction by MoneyLife. I know Sucheta's response would be get out of my face if you don't like what I say.. But that would not deter me from making my point of view here.

We Indians love cash. While the world is moving to electronic transactions. We remain steeped in using cash and hoarding cash for all kinds of usage. The bigger issue is that the high taxes and corruption in the tax administration and business people means that only the salaried class among individual tax payers bear the brunt. Businesses, especially in the unregulated sector or SMEs, want to deal with cash only as it helps them declare lower income.
This results in people having to take out cash for making all kinds of payments - whether they need to buy daily provisions or mobile phones or white goods or pay for government services or even society maintenance fees, etc. - all requires cash payments predominantly.
Banks provide such services for cash withdrawal at their branches as well as through inter connected ATMs. Ther ae costs of maintaining the infrastructure - costs of providing security not ony within the premises but also when currency chests are being moved from one place to the other, costs in manpower to help in reconciliation of the lakhs of daily transactions that happens, costs f maintaining the supervision, audit trails, etc to monitor and prevent frauds.
Why do we Indians think that it's our birthright to get every servixe or facility for free - most of us wouldn't mind spending 1000 rupees on a shirt but we don't want to pay for cooking gas at market prices. We don't mind spending 1000 rupees to watch the latest Salman khan starter with friends or family but we have a problem paying 20 rupees to bank for providing us with an ATM facility close to where we work or live.

I also disagree with a comment made in the article about banks continuing to open new ATMs - as a matter of fact and as per a RHi report released recently the growth in number of ATMs deployed has comedown significantly over the last couple of years. Incidents in ATMs such as the one in Bangalore has resulted in increased demand or providing adequate safety for customers. Can that be compromised by banks who are mandated to provide such services for free?
Yes - there are a lot of things wrong in the banking sector - an over zealous regulator being amongst the top most issues, lot of fat in terms of the net interest margin allowed to the bank, they unwillingness to lend money to smaller businesses, public sector banks being run by the finance ministry mandarins like their fiefdom, and so on.
But not to allow banks to levy reasonable charge to customers for services being provided should not acceptable.

Now I know what I am mentioning here would sound almost like blasphemy to people - but I think we need to control our double standards - we want world class facilities but we don't want to pay for them or we don't want to vote for those politicians who promise growth and development above anything.
Commerce leads to progress. We should encourage people to educate themselves, earn a respectable living.. We should strive to remove the massive corruption in our public and private lives. We should strive for better treatment of people - whether minorities or in lower "caste" or "class". That's what is important. Raising such frivolous issues is a waste of everyone's time.
R S Murthy
Replied to Jingo comment 8 years ago
Sir, Term Depositors are not charged. Currwnt account holders stand on different pedestral and charged accordingly. The issue is Savings Account holders only. Poor interest payment on the balances maintained followed by charges for every service is only causing concern. Cash will remain the medium of settlement till majority of the public become literate and move above poverty level.Middle class being the major chunk of SB account holders, naturally feel bad with every hit.
Advocate Navneet Sarin
Replied to Jingo comment 8 years ago
Dear Mr. Jingo, It appears you belongs to an elite class living in Metro and have never visited Banks for cash withdrawal or deposit. The plastic money is not popular and once you are out of metro or even in metro cities go to any regular market you will need cash. I have come accross hundreds of shops even in Mumbai or Delhi who do not have card payment facility. If you are a local bus traveller you need cash, if you feel hungry and go to and eatable shop you need cash, to survive every where you need cash. You say people prefer cash to hide the income. Even if so Banks who themselves are biggest players in Money Laundering can't become moral crusaders against cash economy by hurting the small customers. That's a different matter and we leave it. There are so many reason behind Cash Economy and we cant discuss them here. The reality is by putting ATM machines bank save more than any one else. You see the number of employees reduced in Banks during last 10 years. So they earn more by installing ATM Machines by reducing the staff at counters. The only reason behind levying charges on Customers using ATM is to mince more money. Banks are many bank robberies in India, but why banks have not stopped opening more branches. Banks have never bothered about the security of their Branches forget the ATM's as everything is insured. So please understand there is only one truth and that is to hide their wrong doings, to show profits and improve their bottom line Banks are playing all these games. No one cares for RBI instructions just for example RBI says cheques must be cleared on same days in metro Cities. But tell me the name of Bank who does not hold the amount/Cheque at least for 3 days. Why because that give them interest free credit for 3 days. I agree to the article that Bank must be forced to be costumer friendly and more efficient and should not loot customers for their inefficiencies and profit.
Replied to Jingo comment 8 years ago
Thanks for your comment.
However, we wish you would have done more reading before labeling the article as 'single sided representation'. Anyway, it is never too late to read, learn new information. We suggest you read few articles written by a veteran banker. and
Thanks again,
8 years ago
Thanks to Moneylife Digital team to compile this representation, which I feel should be mailed to PM and FM for their knowledge and request to take up this issue.
The usurper and arbitrary list of bank charges given in the article are not exhaustive but a few as an example. Now we are afraid to even approach a bank for any service. Recently ICICI Bank sent a dictate that SB account holders will receive Bank statements only son E. No hard copies of Quarterly statements as were sent hitherto. This is against the specific RBI regulation. Imagine what will happen to those who do not have their own PC , printer or Email ID.
In this scenario ,how the PM's dream to cover entire Indian people to have at least one Bank Account in a family will get fulfilled ?
Advocate Navneet Sarin
Replied to MOHAN SIROYA comment 8 years ago
These Banks Feel they are above laws and they accept RBI's Instructions where they suits them otherwise no one cares. Numerous customers have been defrauded at Banks but no one ready to listen. I know a NRI whose 4 FD gone missing fm SBI NRI Br Mumbai, The poor Customer died without having a reply fm SBI.
MG Warrier
8 years ago
ALL the issues raised here are very relevant and deserve attention from the elite group of bankers and policy makers who will be in attendance at the proposed interaction which has also been termed ‘brainstorm session’ by a section of the media. Having said that I view it from a slightly different angle.
Both, Prime Minister Modi and RBI Governor Rajan are good listeners and have a practical approach to issues. The coming together of these two and the Finance Minister for interaction with the bankers and the ‘Think Tank’ of the financial sector, by itself sends out healthy signals. The signals include India’s determination to move forward with reforms with all stakeholders on one page. This is definitely a welcome change from the earlier practice of (a) mutual blame game (b) top functionaries in government and organisations speaking out their mind when they are at a reasonable distance from powerful people who may have a different view or factor in controversial views only while speaking to ‘silent’ audiences. This is a welcome beginning.
M G Warrier, Thiruvananthapuram
Advocate Navneet Sarin
Replied to MG Warrier comment 8 years ago
Sir, There was a thought that Public Sector Banks are only corrupt bankers but that incorrect Recently I came across few matters where I found top private sector banks dealing through agents have mastered the game in big way.
MG Warrier
Replied to Advocate Navneet Sarin comment 8 years ago
Thanks. In the Indian context, public sector-private sector differentiation itself is a misleading concept. Both survive on 'public funds'. Corruption, like cancer, has no class-sector-faith dimensions. Essentially, it is promoted by greed. I have covered some aspects of corruption in my book "Banking, Reforms & Corruption: Development Issues in 21st Century. A Google search will take you to some reviews of the book.
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