Why Bank should collect Service Tax from Bank customer?
In savings account, a meager annual interest is offered whereas the current account holder does not get any interest whatsoever.
Not all banks have ATMs and even those that have, do not have adequate reach for customers.
Many a times, the ATM machines (most of the time unguarded) do not carry cash and sometimes cash is not delivered for technical reasons even when account has proper balance. Those failed transactions are counted for levying charges where even a balance inquiry or statement request etc. is counted as a transaction.
Banks impose minimum balance penalties which should be discontinued. Even RBI gave directives that Zero balance accounts should be allowed which banks do not allow.
ATM card attracts annual charges. SMS alerts are made mandatory for ATM card holders and these alerts are charged (even when there is hardly any transaction during a month).
Number of cheque or cash transactions are restricted in savings accounts. Also, cash withdrawal also is restricted to certain amounts only. Even ATM card utility has monetary limits.
Current account holders have to pay for all services.
Corporates are given plentiful waivers and benefits whereas single account holder has to pay.
Some banks refuse to entertain branch level transactions and even rudely state that ATM should be used.
Now Cash deposit machines are being employed for any or all cash transactions. Even this is being restricted to number of cash deposits per month in savings accounts. Any additional cash deposits through machines are likely to attract charges (if the statement of CEO of ICICI BANK is to be believed)
In short, whatever banking you do phone banking, net banking, branch banking etc. the account holder is made to pay for transacting his/her own money and not any loan product.
Bank employees seldom have any interaction with the account holder. Most services are outsourced to third parties, including customer care and BPOs who are not bankers, attend to customer calls.
Despite eliminating customer exposure to its employees, the banks do threaten to go on strike time and again and hold the account holder to ransom.
With all this the bank employees are one of the best paid paid and do not know what actual work they do for the customers when they sit in their A/c branches or offices.
In the light of the above and perhaps from inputs from the circle, where is the justification for banks to collect service tax and also cess on service tax?
Is playing with account holder's money a service which is being imposed? IS the bank paying any service tax to the account holder for using the money of the account holders for various of its requirements, unquestioned? more
In spite they say it is in their rules book and says it is the customer's responsibility to go through them.
if there is any change in the account structure (normal/salaried savings account), the bank should inform the customer one month in advance before effecting such a change and if the customer has no objection. THIS IS NEVER PRACTISED BY ANY BANK. more
Banking has become a competitive business with the global boundaries getting crushed due to communication explosion and technology interventions. Hence to constantly upgrade themselves and to meet stiff competition, Banks have to upgrade themselves which involves cost. Naturally,those using the new facilities need to pay for the services. Yes, it is a fact that due to technology interventions the gap between served and serving has increased. While the young generation like it, older people do not. There are several glitches in ATM operations, which Banks are trying to annihilate, but could not due to large numbers and extended geographies. However, it is possible to set right the things if there is a will. Unfortunately,ownership among the servicing staff is slowly dwindling. With large scale superannuation in the Banks and entry of inexperienced youngsters without loyalty it is adding fuel over the fire. I feel over next decade these issues might crystallize for betterment in services.
Regarding imposition of service tax it is government's to be held responsible, as having lost avenues of income, they are touching operations in common life, like Airangajeb who imposed tax on beards.Politicians are responsible for our owes and not the Bankers. Yes. Many bankers turn deaf ears to customer complaints as either they are helpless or immune or not bothered as the boot is not punching them.Once they go to other side, they will realise their follies, but by that time many of us would have faced their wrath. God should only help India and senior citizens. more
The post is meant to bring about awareness and thought process to bring to those who matter, viz., the Govt. the regulators such as the RBI etc. If a wrong is being practiced to the detriment of the very savings account holder, then is it justified to take refuge under the pretext that the banks are following Govt. norms or following RBI directives as RBI is the regulator.
Banks only quote RBI when it is pleased to impose conditions or charges on the savings account holders. When it comes to give the benefit of the RBI directives which favor the account holder, the banks take evasive stand of even mock ignorance of the same.
For instance, RBI through its official circulars (You can refer to Goiporia Committee and Tarapore Committee recommendations on service to customers), the following may be looked into:
1. In case there is to be any change in the account structure (normal/salaried savings account), the bank should inform the customer one month in advance before effecting such a change and if the customer has no objection. THIS IS NEVER PRACTICED BY ANY BANK.
2. Zero balance savings account should be allowed but many banks even go to the extent of saying that there is there is no such RBI directive or that they are not aware of such a RBI directive.
3. Banks, as some members have pointed out, impose arbitrary charges. These charges keep reflecting as 'negative balance' in the account for a cunningly deceptive purpose of debiting the same from the account. RBI HAD CLEARLY DIRECTED THAT NO NEGATIVE BALANCE SHOULD BE SHOWN IN ANY ACCOUNT UNDER THE PRETEXT OF COLLECTING PENAL CHARGES (whether justified or unjustified penal charges)
4. When all banks don't provide ATM machines to reasonably close proximity to the customers and allure customers to use 'other bank ATM', why should there be any restriction on such ATM usage or why should there be a limitation on the number of transactions?
5. When a ATM machine (whether home bank or other bank) does not deliver cash after punching in the PIN, for inability to deliver cash or ATM being out of service or ATM has no cash - these should not be computed into 'a transaction' to cunningly levy charges.
Tarapore Comittee (RBI appointed) had in its report exposed 'HIDDEN CHARGES LEVIED BY BANKS FOR GAINING UNDUE RICHES) but there does not seem to be any punitive action taken by the regulator- RBI or the Finance Ministry (Banking Division) and banks go on enjoying such undue enrichment.
Most ATMs do not have a guard or the guard does not help in any manner if:
a) ATM does not deliver cash,
b) ATM delivers torn/damaged currency,
c) ATM has no complaint book.
6. Savings account is essentially money of the account holder and as rightly stated by some members; banks are enjoying free unquestioned access to account holder's money whereas the account holder is subjected to all sorts of restrictions for access to their own money.
7. Banks have practically eliminated paper work where even accounts are now opened with scanned images and signatures because banks have outsourced most of the work to THIRD PARTIES..
a) account opening is outsourced to third parties,
b) customer care is outsourced to third parties,
c) verification is outsourced to third parties,
d) deliverables are outsourced to third parties,
e) ATM management is outsourced to third parties, so on and so forth.
SO, WHAT SERVICE IS A BANKER OR ITS EMPLOYEE WHO ARE PAID EXEMPLARY EMOLUMENTS, DOING TO THE CUSTOMER ?
Are Bank employees spending more time in promoting their offshoot or sister concerns or group companies in the insurance segment, mutual funds sector or even consultancy segment rather than the actual banking function?
Are not the banks responsible for violation of KYC norms which are required to be confidential when they have so many 'outsourced agencies' doing banking work (most outsourced agencies don/t even know what banking work is) - does this come under compliance of RBI directive?
RBI directed that Banks should have grievance redressal system where complaints are required to be address and also have to pay compensation.
The grievance redressal system orchestrated by banks only serve the bank's purpose of hoodwinking the RBI where grievances are mocked to be attended but not redressed and no compensation is paid either.
Which bank is religiously following the RBI directives to the letter, when it has to compensate the customer? more