Senior officials of the Reserve Bank of India (RBI) have been encouraging bank consumer groups to send complaints directly to Governor Y. V. Reddy and it is our experience that his office promptly acknowledges and forwards these complaints. Usually, banks quickly respond to the RBI and help resolve the problem.

At another level, the RBI has also worked through its customer services committee to fix some basics. For instance, delays in crediting cheques to customer accounts, dumping unsolicited credit cards or loans on customers, activating credit cards without specific approval, warning banks to follow Know Your Customer (KYC) rules and not forwarding credit information to CIBIL (Credit Information Bureau of India Ltd.) without informing customers are some important steps.

However, it would be clear to the Governor’s office that banks come up with new schemes and tricks to shave off a few basis points of additional income from customers, faster than the RBI can clamp down on such practices. This is done through inadequate disclosures and hyped-up schemes.

Such dubious practices are rampant in developed markets and experts tell us that the idea is to debit small sums from customer accounts in the hope that he/she will not notice or find individual debits too tiny to complain about. Usually, banks will quickly reverse charges and avoid controversy when a customer complains, but ever so often, incompetent handling throws these issues into the public domain.

Consumer Voice, a Delhi-based consumer group, says that two leading private banks collected a hefty Rs 150 crore by from consumer accounts for failure to maintain minimum balance in the last year alone. It will be interesting to compare this with the penalty (if any) paid by banks to customers for failing to credit cheques or wire transfers in time.

... contd.