What are banks up to?

Hello world,

Money laundering scams in the select branches of Mumbais high profile private banks shattered impressions of their honesty,integrity and subsurvience to laws of the land.Reserve Bank of India has indicated that the private banks of,by,for the India Inc.(corporate houses)are going to be a reality in near future.No bad name to any one, but, in short they will be handy tools of money laundering for their founding fathers and mothers. All commerce and trade bodies with their office bearers bother about BIG, think BIG and act for BIG. They forget that everyone has to be SMALL before being BIG.

i talk about Surat, the hub of many new things.The Chamber of Commerce and Industries has become political play ground.The co-operative banking sector is busy in saving skin.The federation is there .In the wake of successiive scams ,it has lost teeth and nails to represent genuine issues to RBI, Govt.of Gujarat and Govt.of India.

With this scenario,the customers are facing the problem of Knowing Banks! Till recently,we had KYC norms to be fulfilled by customers.Do we have such norms for Banks?

The following tweets by celebrities make interestin reading about our five star banks and their banking norms and practices.

i quote ,

“Vivek Sengupta‏@vsengupta
RBI busy pushing KYC while hapless citizens lose millions to unscrupulous chit funds!Lopsided regulatory priorities @mdesai71 @suchetadalal

Sushovan Chaudhuri‏@mesushovan
@ppriya10 Plz read it:http://www.moneylife.in/article/rbi-tells-hdfc bank-not-to-make-its-own-kyc verification rules/32371.html#.UXgJ7H0JcQU.twitter … – what @suchetadalal had already shared. What RBI actually told to Banks would be cleared. 🙂

Bankimchandra Desai‏@vasanji14h
@mesushovan @suchetadalal It is high time .Instead of KYC,we should embark upon KYB i.e.Know Your Bank !

Abraham George‏@abrahamgeorge112h
@suchetadalal Got a call today from HDFC asking me for my address proof.I said im not an a/c holder in ur bank.Wrong number. “Oh sorry sir

3 May 13 •@abrahamgeorge1 @suchetadalal
\@HDFCBank_Cares RT @abrahamgeorge1 Got a call today from HDFC for address proof.I said im not an a/c holder.Wrong number. “Oh sorry sir

@iamShishir Never mind, given HDFC Bank’s current business policy, they might also ask for one even if u have a Piggy a/c. 😉 @suchetadalal
Retweeted by Sucheta Dalal”

i unquote.

Now and then we look/looked upon Reserve Bank of India’s approach,attitude,decisions and views on policy as well as routine matters. i narrate my experience.i sent the following letter to The Governor,Reserve Bank of India on 26th March 2013.

i quote,

Dr. D. Subbarao
Reserve Bank of India
Central Office
Mumbai 400 001.

Ref. KYC Guidelines
Ref. No.UBD.BPD.CO/NSBI/11/12.03.000/2009-10 Sept29.2009
BD.BPD.CO.NSBI/38/12.03.000/2009-10 ecember23.2009

It is submitted with respect,

That i am a voter citizen of India,

That i am associated with a few co-operative banks as a voter member and account holder and i have business and social relationship with numerous small scale entrepreneurs.

That aforesaid circulars have made devastating effects over their enterprise, banking and economy all having cumulative disastrous effects on their day to day life.

That the Apex Bank, to my knowledge, has not reviewed and revised these guidelines since 2009.

That despite these operational guidelines, stark fact remains that RBI failed miserably to prevent bank scams and closures in co-operative sector,the latest in Gujarat being closure of Ahmedabad’s Madhavpura Co-Op.Bank and Gujarat Industrial Co-Op.Bank Ltd.
That the most important reason of these failures was not the dishonesty of small scale entrepreneurs, businesspersons, account holders but the fraudulent methods of management by officers and politician directors of the said banks.

That by small scale entrepreneurs i mean the persons having Cash Credit Facility below INR 5,00,000/- Rupees five lacs only. Such account holders don’t qualify to pay GST and CST, hence they are not required to have VAT number. It would be of interest to you that the majority of small entrepreneurs fall in this category. Number of such account holders involved in bank frauds and loan scams would be very negligible andi stress upon the fact that the day to day banking business thrives upon these account holders.

That a few of the bankers adhere strictly to KYC norms regarding GST,CST and VAT and demand these registration numbers from those who do not qualify for registration on the basis of annual turn over of INR 05 lacs or less and are therefore not required to have these registration. They are denied cash credit facility on the premise that they have not submitted GST,CST and VAT. Some entrepreneurs do not qualify for registration under Shops and Establishment Act as well as Factory Act because they do their work from their house without violating any norm established by the government.

That KYC norms are intended to establish the proper identity of the customer with his address and other particulars so as to facilitate bankers to trace/locate him/her effectively in case of non payment of dues. If this purpose of identification and /or verification is served by any one document, especially in those having annual turn over of INR 05 lacs or less,bankers should/need not insist for GST,CST,VAT and other registrations under different acts.

That RBI as well as nationalised, private and co-operative banks have not understood and appreciated the sense of integrity, honesty and law abiding nature of common customers having all difficulties in practice. i am in a position to cite examples of nationalised banks’ officers’ connivance in frauds amounting to crores of rupees.

That Central Government and Government of Gujarat have now realised the importance of these common men/women who constitute the major segment of employment. Bigger industries may fetch bigger emoluments in graft, gift and gratification to politicians, government officers, policy makers and bankers who sanction BIGGER loans, but,they give employment to much lesser numbers and there the development gears stick steadfast! Wealth concentrates in few pockets and economy develops only in account books!

That now it is time for customers to have KYB ‘Know Your Banker’ norms!

That i urge you to look back,review,revise and relax the KYC norms for cash credit holders having annual turn over of INR 05 lacs or less.

That all banks including co-operative banks be issued fresh directives to facilitate such account holders.”

i did not get any reply.i sent the following e mail on 25th April,2013.

i quote,

Subject:KYC Guidelines
Dr. D. Subbarao
Reserve Bank of India
Central Office
Mumbai 400 001.

i submitted my views on KYC Guide Lines by e mail and by India Post on 26th March,2013.i am yet to receive RBI’s reply.
In the past,RBI has always responded in time. This is for the first time,i haven’t received any reply .

RBI needs to rethink over its permission to corporates to start private banks.They will be no better than co-operative banks in serving as a handy vehicle for money laundering for their founder industrialists.It is an open secret that politicians harbour their unaccounted money in co-operative and other banks of their choice. Recent scams in Axis and HDFC banks speak enough.

With your knowledge, i release my letter dated 26th March, 2013 to various banks,associations and media to develope public opinion on the subject.”

i unquote.

It is time for all genuine bankers to wake up.They don’t have anything to lose but their banks and customers. In coming days,it will be imperative to display ‘janm patrikas and karm kathas’ of Chairperson, directors, general managers, managers, agents,officers of every bank on every branch’s notice boards.RBI and SEBI do not worry about ‘small’.They are interested in serving and saving their real masters like Ambanies,Tatas,Ruias,Adanies,Mehtas,Jindals. Government or for that sake MPs and MLAs are of no use.They are their collaborators and function hand in gloves.

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