Sunday, December 7, 2014


Banks have become a part of living and have evolved over the years. The recent decision to charge customers for ATM usage set the mind on the run. Racing back to the days of the fabled Banker Margayya of R K Narayan to the present sophisticated banking norms, the basic intention remains the same. Banks as institutions suck the money which is stowed away for a rainy day or lying in excess for a nominal interest to lend the same to the needy for a higher interest so as to earn a profit. Over the years, the banks have assumed a right to dictate terms to the source of its business which is the customers who come in the form of depositors rather than the customers who come in the form of borrowers.
Let us look at the various restrictions imposed on the depositor. The first was a minimum balance to be maintained. Then, the current account scheme surfaced which would not carry any interest but dangled the carrot of overdrawing facility with a cap. It then brought in the fixed deposits which would necessarily have to be parted with for a specified time frame for a slightly higher rate of interest. Schemes such as sweep from savings to fixed accounts were introduced. Parallely, the borrowers were being let off the hook in the form of bad debts. These borrowers were either belonging to the categories of farmers, weaker sections, minorities etc or to the elite who could power themselves through any judicial system.

The gap in the desirable profits and the actual profits set the creative brains thinking. Introduction of e banking, ATMs, debit cards etc came with no hidden costs. The manpower manning the banks were sacrificed leading to proportional reduction in the potential customers. With no intention to collect either from erring borrowers or being able to flex its muscle due to its deteriorated manpower, banks resorted to camouflaging its inadequacies as services. The costs came to be levied and the latest of this is the cap on the number of withdrawals by a customer. Ironically, it was the same banking system which promoted ATMs and debit cards by refusing to entertain customers request to withdraw their own money from the branches. Today, it uses the money of these very customers to advertise their intention to retain their money. Further, the ATMs are programmed to not release money beyond a sum within a swipe. Thus, one is forced to swipe the card multiple times to obtain the money lying in his account. Thereafter, the same customer is penalized with service charges probably with a service tax to obtain his own money. The banks which were once channels of only accounted money are now channels for routing moneys of devious means too and the irony of the banking system continues. 

Dr Manmohan Singh may have signed off but Mr Rajan needs to think from the depositor’s perspective too! As the Government encourages banking will the banking system promote an alternative to itself. Fodder to think!!!