1. Rising Charges on Basic Banking Services

• Banks increasingly charge for formerly free services, such as deposits and withdrawals after a set limit.
• Customers face frequent and arbitrary increases in fees, often with little explanation.
• These charges disproportionately hurt regular depositors while benefiting the bank’s bottom line.

2. Issues with Home Loan Rates

• Banks:
• Quickly raise interest rates for floating-rate home loans when rates rise.
• Delay passing on rate reductions unless customers request resets, often charging hefty fees for the same.
• Unfair Treatment:
• Existing customers often receive worse rates compared to new borrowers.
• Lack of awareness among borrowers leads to significant financial losses over time.

3. Mis-Selling of Products

• Banks push unsuitable third-party products (e.g., insurance) on unsuspecting customers.
• Customers often lack recourse due to weak grievance redress systems.

4. Weak Regulatory Oversight

• Reserve Bank of India (RBI):
• Introduced the Charter of Customer Rights in 2014, focusing on:
  • Fair treatment
  • Transparency
  • Honest dealing
  • Privacy
  • Grievance redress
• However, the charter remains toothless due to the absence of enforceable timeframes, penalties, or compensation mechanisms.
• Digital Payments Liability: Despite a 2016 draft circular to limit customer liability in fraud cases, formal regulations remain absent.

5. Exploiting Depositors

• Savings and current accounts are highly profitable for banks, with spreads of 6-7%—among the highest globally.
• Customers are charged for basic services like withdrawing their own money, which is rare in other countries.

6. Public Reaction and Advocacy

• A petition on Change.org, signed by over 214,000 individuals, demands RBI action against unfair banking practices.
• Advocacy groups and experts (e.g., Moneylife Foundation, AIBEA) have raised these issues with the RBI.
• Upcoming #BankSeBachao Tweet Morcha aims to pressure the government and RBI to intervene.

7. Recommendations

• Transparent Pricing: Banks must justify charges with detailed cost breakdowns.
• Customer-Friendly Practices: Automatically adjust interest rates and strengthen redress systems.
• Regulatory Enforcement: RBI must enforce its Charter of Customer Rights and hold banks accountable for mis-selling and unfair charges.

Summing it up

Banks must prioritize fair treatment of depositors, transparent pricing, and efficient grievance redress. The growing public anger and collective advocacy efforts, like the #tweetmorcha, could catalyze much-needed reforms.

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