The Reserve Bank of India is the central Bank of the country, an independent institution, controlling and regulating the financial transactions of the country. It undertakes regular inspections of Banks or is supposed to do so, as the finances of the people are involved. Yet, frequent scams are witnessed in various Banks, including Cooperative Banks. In Goa itself, two such well known Banks went bust and poor people lost their hard-earned money.
It is not infrequently that the role and performance of the Reserve Bank of India has been put in question, as far as working of commercial Banks in India is concerned, especially because big industrialists get away with huge debts, with the patronage of those in authority. Corruption and bribery among top influential Bank officials are putting people’s deposits at serious risk.
Though unconnected with dishonest practices, some Banks are now guilty of adhering to some RBI directives, without intimation to clients. They refuse to cancel before maturity Fixed Deposits repayable to Either or Survivor, where one of the depositors has expired. This is in compliance with RBI Circular No. DBOD Leg BC 37 /09.07.005/2012-13 dt 16.8.2012, wherein Banks were instructed that if such a premature withdrawal is to be allowed, they could, “provided they have taken a specific joint mandate from the depositors for the said purpose”. This was in confirmation of two earlier Circulars dated 9.6.2005 and 4.11.2011. These eventually mean that a surviving depositor needing money to pay off debts or expenses incurred on the illness and subsequent death of the other depositor is unable to do so by breaking the deposit before maturity, unless specific instructions for premature payment were given earlier by both the depositors. Such deposits can, however, be withdrawn on maturity.
Possibly, RBI was constrained to issue such directives after some Banks got involved in disputes with legal heirs of a deceased joint depositor. Such instructions were not, to my knowledge, in force prior to 2005. Some Banks still do not take such instructions from the joint depositors when the deposit is made, putting the survivor in serious difficulties and problems. It also happens in various Banks that instructions given at the time when the deposits are done or nominations made, such instructions are not carried over in their computer records, in case of renewals, causing undue inconvenience to survivors/nominees. Many Banks, unaware of RBI instructions, allow premature payments to surviving depositors, as before. But, some still do not take the required instructions but are prompt enough to refuse premature payment in case of death of one of the depositors. Hence, all Banks must ensure that the clause is incorporated in the FD form and itself, to avoid overlooking it and causing inconvenience to surviving depositors.
RBI, during inspections, insist on renewals of KYC but not on instructions from joint depositors for premature withdrawals. NRIs are often inconvenienced as some Banks insist that documentation for renewal of KYC needs to be attested by the Consulate in the country of residence of depositor, which is not an easy task. KYC requirements must be eased by RBI, as accounts are designated as dormant, without the knowledge of clients and cheques issued often returned unpaid. RBI must direct Banks to send Registered A/D letters to customers to update KYC documentation and unless such letters are sent, it would be illegal for Banks to return their cheques unpaid.
RBI’s passivity and indifference often turn detrimental both to Bank customers as well as those who strictly follow the law or their directives. Some authorized money changing outlets had to close down in the past, because they were incurring losses, as similar shops were openly doing illegal business, without fulfilling stipulated requirements, with RBI taking no notice of such anomalies
In mid 1990s, months after Non Resident Non-Repatriable Deposit Scheme was introduced by RBI, it issued a Circular, prohibiting Banks from renewing the interest on such deposits, instructing that it would have to necessarily go to NRO deposits. Tax is deductible, at source, on the interest of NRO deposits. Most Banks refused to comply with these instructions, as RBI could not issue them, retrospectively. However, a few did to avoid penalties from RBI. And, they suffered heavily for following the directives. NRIs, unhappy with these few banks complying with RBI directions prejudicial to them, withdrew their deposits. Despite written complaints to RBI, Panjim about loss of deposits to other Banks named therein, flouting RBI norms, it not only chose to ignore them, but one Chief Manager, who took up cudgels to talk to RBI Chief in Goa, was bluntly told that he was “exceeding his brief”. RBI is known for issuing Circulars, which cause dissatisfaction and difficulties to customers, leaving the Banks to face the wrath of such preposterous directives.
Bank customers who have been used to prompt and polite service with a smile, in the past, by the staff, often known to them, today grumble that both clerical and officers in Banks are not only indifferent, save honourable exceptions, but are ignorant of the local language, with even Managers not well conversant with English. They feel upset that these Banks, especially the nationalized ones, which grew in Goa due to the deposits and goodwill of Goans, cannot find even clerical staff familiar with local language.
With stiff and growing competition among Banks, especially with private Banks using better technology to serve their clients, nationalized Banks which have made a mark in Goa, both by way of deposits and service, need to tread cautiously not to be out beaten by others, which provide better and faster service.
(The author is a
retired banker)
