Are banks fleecing you? Over 200,000 customers urge RBI's intervention

Fight is against rising fees on services, hidden charges, higher interest rates: Petition

Bank customers seem to be determined to fight against the rising fees on banking services, hidden charges, higher interest rates, and mis-selling of other banking products. Over 200,000  have signed an online petition sent to the Reserve Bank of India (RBI) in this regard.

What is the campaign about?

Veteran journalist Sucheta Dalal started the petition titled - RBI Governor: Please Stop Banks Fleecing us Depositors!” on www.change.org.

According to Dalal, the purpose of this campaign is to highlight "the unfair treatment that bank customers suffer".

The petition states: A group of bank consumers and non-governmental organisations (NGOs) are disturbed at the unfair treatment that bank customers suffer in the form of frequent, arbitrary and one-sided increase in banking charges, or the refusal of banks to automatically pass on contractual benefits such as lower interest to those with floating rate home loans, or the rampant mis-sellling of third-party products such as insurance."

A memorandum is attached to the petition. Click here to view it.

These are the issues the petition addressed

1. Digital Payments

RBI: On August 11, 2016, RBI issued a draft circular on limiting customer liability and shifting the onus of proving customer fault on banks. RBI had sought feedback from the public before 31 August 2016. Here is the Customer Protection – Limiting Liability of Customers in Unauthorised Electronic Banking Transactions

Memorandum: The Memorandum addressed to the RBI governor Urjit Patel states that the RBI has not yet converted the draft into a master circular.

"We feel that with the increased use of digital payments post the demonetisation drive, it is necessary to have in place a mechanism or system to protect customers from unauthorised banking transactions," the petition said.

2. Bank Account Number Portability

Memorandum: The petitioners have asked RBI to follow telecom sector's lead and introduce 'portability of bank accounts'. 
 

RBI: On May 30, 2017, RBI deputy governor S S Mundra broached the topic of account number portability. According to LiveMint, he pushed banks to allow customers to move seamlessly between banks without having to change their account numbers. Currently, bank account number portability doesn’t exist anywhere in the world.

3. Unfair agreements

The petition urges RBI to be specific about barring the levy of unfair charges otherwise bankers take undue advantage and fleece consumers.

4. Charges: 

The petition wants 'frequent increase in charges and billing customers by stealth through opt-out clauses that are not noticeable must be stopped immediately.'

5.    Faulty Systems:

Wrong emails being tagged by faulty algorithms of banks and finance companies, are leading to emails being sent to people who have no borrowing or accounts. This is a serious issue that will affect people's credit history; the use of such faulty algorithms and defeats the purpose of KYC and causes serious harassment.

6. Master Circular Changes:

Frequent changes in the Master Circular or Notifications by RBI require banks to make changes in their Core Banking Systems.  This leads to high IT costs, which are ultimately passed on to consumers. The RBI must restrict changes in its circulars to 4 times a year to keep costs in check.

7. Consumer Charter

RBI 

The RBI issued the Charter of Customer Rights on 3 December 2014 recognising five basic rights of bank customers and asks banks to adapt and implement it after their Board's approval. These are (i) Right to Fair Treatment; (ii) Right to Transparency; Fair and Honest Dealing; (iii) Right to Suitability; (iv) Right to Privacy; and (v) Right to Grievance Redress and Compensation.

Click here to view the Charter of Customer Rights

Petition

The petition claims that three years down the line, the RBI has not fixed time frames for grievance redressal nor announced penalties for failure to treat consumers fairly, despite repeated appeals by consumer groups.

The banks have justified such moves on two grounds- if you want better service you should pay for it, says FirstPost.

#TweetMorcha

In March 2017, a campaign had been launched against unfair bank charges. The activists escalated the campaign further with #TweetMorcha addressing the prime minister's Twitter handle.

RBI has not yet responded. However, the petition has found widespread support from people across the spectrum and has garnered 214,983 signatures so far.

Petition impact

Reserve Bank of India (RBI) has set up an Enforcement Department (EFD). EFD would serve as a centralised department to speed up regulatory compliance. EFD has been set up to separate those who oversee the possible rule breaches and those who decide on punitive actions so that enforcement process operates fairly and is evidence based.

It will look after the issue of any violation by banks and impose penalty or issue warnings.

The EFD has become functional with effect from April 03, 2017. The EFD has been entrusted with the responsibility of enforcement action on commercial banks.