Unfair Banking Practices

Banks in India can be divided into two broad groups. The first is the set of all nationalized or old school banks which includes the likes of SBI, Syndicate Bank, Canara Bank etc. The second set includes the new and what I like to call the "page 3" banks like ICICI, Citibank, HDFC Bank etc.

The new banks were supposed to set new standards in customer service and efficiency in Indian banking. Unfortunately for their customers, they have instead set new standards in fleecing them.

I have an account with Citibank and here are two examples from just this one bank.

1. I deposited an outstation cheque (drawn on a Syndicate Bank branch in Mysore) for Rs.500. Quite a few days later, I see that there is a credit of Rs.387.64. Surprised, I look at the detailed transactions and find out where Rs.112.36 of my money has disappeared.
- Rs.100 towards Outstation Cheque Charges
- Rs.12 towards a 12% service tax on service charges of the above Rs.100
- Rs.0.36 towards an education cess of 3% on the service tax of Rs.12 on the service charges of Rs.100

I guess we customers should be happy to receive only 78% of our money most of the times. What a great return!

2. A cheque for about Rs.8000 drawn on a local bank was deposited two weeks ago at the same Citibank. One would think that in this age of electronic clearing houses money would quickly transfer between banks. One would also think that since one day was the absolute upper limit in the days of our old nationalized banks when there was no electronic clearing available, things would be better these days. However, one would be wrong. Very wrong.

You see, these new banks in their zeal for "efficiency" like to take their own sweet time to deposit the money into your account. A two week delay is a two week loss to my interest on that amount, and a two week gain for Citibank since they get to invest the money for that duration. Talk about playing the "spread". Not only does Citibank not have to pay my interest, they make money on top of it! If this isn't a cynical manipulation of customers I don't know what is.

I have had other dealings with ICICI and they are no better. It appears as if the Reserve Bank and Finance Ministry have completely given up their responsibility to the people to ensure fair banking practices.