By Tensing Rodrigues*
A couple of days back someone what’s apped me a joke, Why is April 1 called a Fools’ Day? Because having paid the tax on the last year’s income, we begin earning for the next year, was the answer. Sometimes I wonder whether we are fools for keeping our money in the banks.
Banks have been in the news lately; all for the wrong reasons. Let me not get into the dirty details. But, on a very personal note is our money safe in the banks? Some of us indeed many of us particularly the old fashioned ones may be quite at peace because our money is with the ‘government’ banks. But if we are to go by what the RBI Governor has to say we may be under a delusion. In a speech some weeks back in Gandhinagar, RBI governor Urijit Patel has used tough words to draw the attention of the government to the fact that RBI can do pretty little to reign in wayward public sector banks.
The reasons are a plenty. First and foremost, according to Patel, government owned banks do not need a licence from RBI under Section 21 of the Banking Regulation (BR) Act of 1949. So RBI cannot revoke such a licence if necessary to maintain order in the financial system. The section 21 applies only to the private sector banks. RBI can take appropriate action against private banks if investigations show gross violations but cannot do anything in the case of government banks. If a bank goes bankrupt RBI can force liquidation in case of a private bank but can do nothing to a public sector bank.
All commercial banks are regulated by the RBI under the Bank Regulation Act. However, the section of this act which vests the power to remove directors and management does not apply to public sector banks. As a result the management of public sector banks is more amenable to the government than to the RBI. The same is true in the case of supersession of a bank board. And if a bank’s money goes down the drain as witnessed in US and Europe a decade back, RBI can force merger or takeover to save the system but is helpless if it happens to be a government owned bank, only the government has to act.
We are definitely sitting on a bomb. And if one takes into account what one sees during one’s regular visits to the banks there is hardly any ground for confidence building. Seeing the friendly staff who go in and out of cashier’s cabin, the employees what’sapping under your nose as you wait for your turn, the help desks that are manned by persons who know no head or tail of bank’s processes and regulations, the managers who are helpless in disciplining obstinate subordinates, one can only grow in fear about whether or rather one’s money is in safe hands.
But wait. Do not think that you are treading on a safe ground when you transact sitting in the air conditioned comfort of a private bank with the melodious sales pitch of the sweet executives. The biggest nuisance in a private sector bank is the inscrutable technology and the mind boggling turnover of employees.
One often wonders whether this is just a nuisance, or rather a hazard. At least I feel very uncomfortable. Even in the best of the banks. Recently I had a ‘strange’, should I say a ghostly, experience in one of the leading private sector banks. Because one of the websites at which I had used my credit card was misusing the information provided. I hot listed the card and opted to have it re-issued with a new number which is what I was advised by the bank. The card was immediately cancelled. I felt safe. Next month I was sent a bill for the re-issuance charges. But the new card did not arrive. So I visited the bank. I was told that my new card has been cancelled, because of a message they had received from me. I was left wondering which ghost had sent that message.
I am still wondering. Forget about the hundred and odd rupees lost- feeling totally unsafe with all the ghosts lurking in the beautiful corners.
*The author is an investment consultant. Readers can send their comments and queries to email@example.com