The All India Bank Employees' Association (AIBEA) in a memorandum to Reserve Bank of India (RBI) Governor Urjit Patel sought action on protecting bank customers against unfair practices such as one-sided loan agreements, miss-selling of products and hidden charges levied by banks.
To protect customers, the bank union wants the governor to ensure measures are in place to avoid any unjust practices by banks.
The memorandum has been backed by the depositors' forum, other employee unions and consumer forums.
In the memorandum, AIBEA has sought limiting of liability in an unauthorised digital banking transaction and bank account portability to improve customer experience.
"We, 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," said C.H. Venkatachalam, General Secretary, AIBEA.
Stop hidden costs and conditions
In the memorandum he said, one-sided loan agreements with details buried in fine print are bleeding customers. Frequent increase in charges and customers being billed through opt-out clauses that are not noticeable while signing up for a service, must be stopped immediately. Further, 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 in specific banks.
The union body has taking the consensus view of consumer activists, policy watchers, bankers, and trade unions to ensuyre "urgent policy changes to ensure that banks treat bank customers fairly".
The RBI has not taken banks to task on the many "unfriendly practices" that are increasing with impunity, Venkatachalam said.
Over the years, RBI has remained silent on several alleged anti-depositor actions of banks. Moreover, Venkatachalam said, the Banking Ombudsman's rulings tend to side with banks.
According to him, with the increased use of digital payments post the demonetisation drive, it is necessary to have a mechanism in place to protect customers from unauthorised banking transactions.
Limited liability and Bank account portability
Venkatachalam was of the view that RBI must set out a master direction of the draft circular issued in August 2016, mentioning the limiting liability in an unauthorised banking transaction. This will make a huge impact on protecting customers from frauds.
The memorandum also pushes for effective portability of bank accounts as a good anti-dote to several restrictive practices followed by the banks.
"This has been successfully implemented in the telecom sector and helped consumers...Portability of loan exists on paper, but has to be made easier and seamless to execute without imposing fiscal and non-fiscal burden on the consumer," Venkatachalam added.
RBI first actively considered the portability idea in July 2017 where deputy governor SS Mundra at a banking ombudsman conference asked banks to work towards account number portability wherein customers would be able to silently walk out from one institution to another, in case of any dissatisfaction with services.
There is also a petition signed by over 2 lakh people, initiated by the depositors' forum addressed to RBI governor saying, "Please stop fleecing us depositors".
Stating that the Charter of Customer Rights which was issued in December 2014 has been largely toothless, Venkatachalam added that RBI must urgently make provisions to fix timelines for redressal and escalation, penalty for negligent service and interest/compensation to customers for losses caused due to miss-selling.