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sharmajee

Another decision revealing how private banks(HDFC), twist the law in connivance with RBI(sleeping watch dog)

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sharmajee

I am attaching here with decision of CIC in appeal against working of private banks and how they fix their service charges.

 

1. Reserve Bank of India accepted that it regulates HDFC Bank Ltd in terms of the provisions of Banking Regulation Act, 1949 and Reserve Bank of India Act, All banks have to adhere to the guidelines and rules framed by Reserve Bank of India. 1934. But it didnot provide specific rules.

 

2. On fixing /levying of service charges: RBI furnished that In terms of extant guidelines issued by RBI,, With effect from September, 1999 banks have been given freedom to fix service charges for various types of services rendered by them.

Further, in terms of paragraph 6.2 and Annex I of the Master Circular dated July 1, 2009 on Customer Service , banks have been advised that they should make basic banking services available at reasonable prices I charges to customers.

While fixing service charges, banks should ensure that the charges are reasonable and not

out of line with the average cost of providing these services.

 

3. On my query how many times in last 5 years HDFC Bank has sought approval.....for levying service charges...... RBI first gave no reply but on the order of CIC, now RBI confirmed that HDFC Bank has not sought approval even a single time on fixing service charges in last 5 years.

 

This is an intersting case for forum. Members please throw some light, as to how we may take this public cause to a logical end. Private banks are fixing service charges arbitrarily and sleeping controller/ watchdog RBI, supporting illegality committed by RBI by keeping mum.Ultimate looser is public who is paying unjustified arbitrary service charges.

scan0001.pdf

CIC_SM_A_2011_001218_SG_15034_M_68098.pdf

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jps50

RBI has no role in deciding service charges of banks. It is decided by board of directors of repective banks keeping in view cost, market forces and charges levied by other banks. RBI has no control over such matters in liberalised economy. It does not require approval of RBI. However, as consumers we can decide to avail or not to avail particular service of a bank after knowing changes or new charges 30 days in advance.

 

In all fairness, RBI should check once a year at least if service charges are reasonable for basic services.

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smbhappy

It is irony that the Govt has given a free hand to loot the public through the privatization of the banking services. unlike the public Sector Banks, of which Government is the majority holder and regulating the financial market through them (including the social responsibility), private banks are minting money through the artificial money scarcity created by the public sector banks (by not performing and fulfilling its social responsibility by denying loans to specific sectors) private banks make hay while (nonperformance) sun shines. Government has also jumped by proxy into the private banking arena through ICICI, IDBI, AXiS and other banks through equity participation through LIC and other big public sector corporates. Government is too into the looting spree on the innocent and unsuspecting customers.

 

These banks are making money to pay hefty salaries and other perks to its employees and agents and work under a complete grab of secrecy under the "Private" Label.

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jj99

Similar is the case of levying interest charges on credit card transactions

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smbhappy

Such situation lead to the Wall-Street like movements, where corp orates, banks and others are generating profits in many proportions to their investments and stashing money into properties and other collateral at the cost of innocent consumers, by taking all their earnings and savings away.

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trey

@ smbhappy

 

If I am not wrong IDBI is a public sector bank whereas ICICI and Axis bank are private sector banks.

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smbhappy
trey wrote

 

@ smbhappy

 

If I am not wrong IDBI is a public sector bank whereas ICICI and Axis bank are private sector banks.

 

 

ICICI bank came from the Industrial Credit and Investment Corporation of India which was a GOI enterprise. The Industrial Credit and Investment Corporation of India Limited (ICICI) incorporated at the initiative of the World Bank, the Government of India and representatives of Indian industry, with the objective of creating a development financial institution for providing medium-term and long-term project financing to Indian businesses. Mr.A.Ramaswami Mudaliar was elected as the first Chairman of ICICI Limited.

 

Axis Bank is a Bank of Unit Trust of India and formally it was UTI Bank.

Axis Bank India, the first bank to begin operations as new private banks in 1994 after the Government of India allowed new private banks to be established. Axis Bank was jointly promoted by the Administrator of the specified undertaking of the Unit Trust of India (UTI-I), Life Insurance Corporation of India (LIC) and General Insurance Corporation Ltd. Also with associates viz. National Insurance Company Ltd., The New India Assurance Company, The Oriental Insurance Corporation and United Insurance Company Ltd.

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karira

Welcome to a Capitalist society.....

 

As much as the Bank has a right to decide service charges, the customer has equal rights to demand the service charges in writing before opening the account. Ask for those service charges (in writing) from 5 or 6 banks and then choose the bank which suits you best.

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trey

@ smbhappy

 

IDBI is listed by Govt. and RBI as 'Other Public Sector Bank'.

 

It is the only public sector bank in the other list (Please see the attachment). Could you please shed some light on this?

PublicSecBanks1.pdf

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jps50

Even in case of public sector banks, RBI has no say in deciding service charges or interest rates. RBI makes only policies within which all banks have to function. This is liberalisation. All banks as per RBI policy directives have to put service charges and interest rates on website and also to make available to general public on demand. We have choice to select the bank we want at the price quoted by them. It is like buying kirana or vegetables.

 

In case of cartalisation or market manipulation [like reported in civil aviation] RBI or Competition Commission of India can intervene. Recently prepayment charge of housing loan with floating rate was struct down by CCI.

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smbhappy

As per the Definition of the Public Authority in section 2(h) ICICI and Axis Bank too are Public Authorities. I wonder if any one ever tried to get them declared so??

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trey
As per the Definition of the Public Authority in section 2(h) ICICI and Axis Bank too are Public Authorities. I wonder if any one ever tried to get them declared so??

 

Please clear my confusion, if ICICI and Axis bank are public authorities then why are they listed as Private sector banks by RBI? (Please refer to the attachment).

PrivateSecBanks.pdf

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smbhappy

The matter in the attachment you are referring to is relating to NPA etc.

 

From the equity participation and other ownership details, it is well made out that the ICICI and AXIS banks are promoted and owned by Government or its organs like LIC, Insurance Companies, RBI, World Bank etc.

 

You may take up the mater with the banks or their promoters.

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sharmajee
RBI has no role in deciding service charges of banks. It is decided by board of directors of repective banks keeping in view cost, market forces and charges levied by other banks. RBI has no control over such matters in liberalised economy. It does not require approval of RBI. However, as consumers we can decide to avail or not to avail particular service of a bank after knowing changes or new charges 30 days in advance.

 

In all fairness, RBI should check once a year at least if service charges are reasonable for basic services.

 

Following are also RBI guide lines on fixing service charges:

 

in terms of paragraph 6.2 and Annex I of the Master Circular dated July 1, 2009 on Customer Service , banks have been advised that they should make basic banking services available at reasonable prices / charges to customers.

While fixing service charges, banks should ensure that the charges are reasonable and not

out of line with the average cost of providing these services.

 

It appears RBI has made the guidelines without any supervisory controll. Public also has accepted it. who will decide that charges are not out of line.....reasonable......

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