Court tells RBI to get tough with banks

The Supreme Court has asked the Reserve Bank of India (RBI) to demand responsible behaviour from banks while communicating with customers.

Especially so, while making transactions in rural areas or when dealing with the poor, who may have little knowledge of what they are signing up for.

Right to Information (RTI) activist S Dheenadhayalan says the customer can now look forward to a level-playing field.

A top RBI official is on record as saying that “a great threat arises from the asymmetry between information and power between FIs and poor consumers.”

The official said, “This means that there is a real potential for negative outcomes arising out of institutional abuses or ill-informed client decisions.”

An RBI Master Circular, issued on July 1 this year, asked banks to ensure entry of correct and legible particulars in the pass-books and statement of accounts.

In the case of electronic clearing and electronic fund transfer, banks do not provide details. This is in spite of the particulars provided by the receiving bank.

In some cases, computerised entries use codes which just cannot be deciphered, the RBI said.

It added that banks ensure that brief, intelligible particulars are entered in passbooks/statement of account.

This was followed by a Supreme Court clarification recently on admissibility of computer records but subject to stringent conditions.

Generally, the loan accounts bear a foot-note saying “any discrepancy in this statement has to be brought to the notice of the bank within a period of seven days.” But now a bank will be required to ensure that the statement of account is in conformity with section 65 (B) (2) of the Evidence Act, Dheenadhayalan said.

It will need to be in congruity with the ledger folio and with the contractual rights and obligations, followed by the disclaimer about discrepancies, if any. For instance, bank computers charge interest regularly on a loan account and then issue internal “systemic vouchers” for these entries every month.

But these are not shared with customers who may not be tracking their accounts.

The customers are charged a normal interest, which shows up in the loan accounts. But, as RTI documents show, they are unaware of the actual amount, which could vary from month to month.

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