An Indian bank appears to be scamming its customers; here’s how an alert citizen discovered it

March 26, 2017 yazdi2 Comments

Karthik Srinivasan, a Digital Marketer from Bangalore was going through his email when he discovered that HDFC Bank had been charging him Rs 100 per quarter for a program he never signed up for.

On delving deeper, he discovered that the service was an opt-out program that had been activate for his account without his express consent. Worse still, the opting out requires a member to actually read their spam-like banking emails, from top to bottom, discover the fine print that states that the offer is an opt-out one and then click on a link to opt-out of the service.

But what’s Rs 400, right? That still doesn’t equate to hundreds of crores of rupees.

Rashmi R. Padhy took to Medium to break down why the money is real and why this is indeed a scam.

Pointing to VAS (Value-Added-Service) fraud that was prevalent some years ago, Padhy notes that telcos used to offer VAS as “free” trials. After the trial was over, these telcos would charge you for the service and keep doing so until you opted out.

The value of the transactions was small, but scaled up, the telcos likely earned in hundreds, if not thousands of crores. The rising number of complaints caught the Telecom Regulatory Authority of India’s (Trai) attention and the practice was halted.

HDFC Bank appears to be doing the same thing. The bank essentially upgrades you to a free Classic / Preferred Banking trial program without your consent and then charges you Rs 100 — plus service tax — per quarter till you opt out.

Since most people would not read the mailer that explains all this and since the price isn’t placed up front, most people will not opt-out because they simply don’t know.

Padhy breaks down the calculations as follows. Charging 1.2 Cr customers a fee of Rs 400 a year, HDFC is set to earn upwards of Rs 400 Cr a year. For free, without the explicit consent of its members.

The calculation may not be as cut and dried as Padhy puts it and the numbers might be much lower. This doesn’t, however, change the fact that the program is inherently fraudulent. And other banks might soon follow suit, if they haven’t already.

As heinous as the practice might seem, it is currently perfectly legal for it to do what it’s doing.

Most people may not even be aware of the service or the charge. A charge of Rs 400 a year can easily get lost in the tens of thousands of transactions that we perform every year. And how many of us actually peruse through our monthly bank statements in that much detail anyway? Many more of us probably delete bank mails the moment they arrive in the first place.

Srinivasan did not take this charge laying down. On discovering the charge, an average person might simply have opted out, vented a bit on social media and left it at that. Srinivasan is, however made of more Gandhian stuff. As Office Chai puts it, Srinivasan is now on an online ‘satyagraha’ to get HDFC Bank to apologise for trying to scam its customers in such a way.

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Forget Bullet Trains, Help Fight TB Instead: Dr Udwadia

March 26, 2017 yazdi1 Comment

“Tuberculosis is Ebola with wings. It does not differentiate between the driver in the front of the Mercedes to the CEO in the back or between the maid in the kitchen and the memsahib in the living room. It kills an Indian every minute.”

As a lead up to World Tuberculosis Day, TED has released India’s first Ted Talk on TB by Zarir F Udwadia, a leading chest physician from Hinduja Hospital, Mumbai.

He highlights India’s TB problem, which persists in epidemic proportions, terming it the country’s biggest public health issue.

One indian dies of this disease every minute. Dr. Zarir Udwadia shares the story of the suffering of one patient diagnosed with Totally Drug Resistant -Tuberculosis (TDR-TB). And unfortunately,succumbing to it.

https://www.thequint.com/health/2017/03/23/world-tb-day-in-india-pm-modi-forget-bullet-trains-help-people-fight

Banks cannot insist on ID proof to cash bearer cheque

March 23, 2017 yazdi1 Comment

Overturning an order of the Maharashtra State Consumer Disputes Redressal Commission, the National Consumer Disputes Redressal Commission (NCDRC) last week termed the refusal of HDFC Bank to hand over cash to a bearer of a cheque, after verifying his credentials through the account holder, as “a clear case of deficiency in service”.

The order from NCDRC, issued on 15 March 2017, states, “No doubt the complainant had not furnished his ID, but the fact remains that admittedly not only the cashier but also the Bank Manager separately rang up the account holder on his mobile number, who verified having issued the subject cheque and gave clearance for encashment. The bank officials, however, declined to encash the cheque. This, in our view, is a clear deficiency in service.”

The order relates to a consumer complaint filed by Mumbai resident Prakash Sheth against HDFC Bank. Sheth required Rs3 lakh to be deposited in the hospital for treatment of his ailing mother, in 2010. He requested his nephew, Chirag, for the money. Chirag gave a bearer cheque to Sheth, who then presented the bearer cheque on 7 May 2010 at HDFC Bank. The cashier in the bank asked him to come back at 4pm because of insufficiency of funds. When he returned at 4pm, the cashier asked for his photo ID, which Sheth was not carrying. The cashier then called up Chirag to seek verification of issuance of the bearer cheque. Chirag confirmed it, but the cashier refused to honour the cheque and Sheth was asked to meet the branch manager. The branch manager too checked with Chirag to confirm that he indeed had issued the cheque. Despite that, the manger insisted that Chirag should personally come to the bank, which the latter was unable to. The branch manager then refused to honour the cheque.

Claiming this to be deficiency in customer service, Sheth filed a complaint in the Consumer Forum at South Mumbai District, seeking compensation to the tune of Rs1 lakh towards mental agony and physical harassment. Sheth also appealed for a directive to the bank to stop this practice. The bank was served a notice, but it claimed that it had rightly not honoured the cheque as per guidelines from the Reserve Bank of India (RBI). The District Forum therefore dismissed the complaint. Subsequently, the Maharashtra State Commission too dismissed Sheth’s petition, stating that the bank had rightfully adhered to RBI guidelines.

As per RBI guidelines, banks have been advised that “in case of transactions carried out by a non-account based customer, that is a walk-in customer, where the amount of transaction is equal to or exceeds Rs50,000, whether conducted as a single transaction or several transactions that appear to be connected, the customer’s identity and address should be verified”.

However, Sheth’s contention was that two officials of HDFC Bank had personally cross-checked with the account holder, which proved that it was a clear case of harassment.

In this case, while the State Commission dismissed Sheth’s petition, it upheld that although Sheth was not an account holder of HDFC Bank, he still was a consumer. The Commission observed “…the consumer is not only the person who hires or avails the services of the service provider but the beneficiary also. It is argued that once the account holder had issued a cheque in favour of someone, he automatically becomes the beneficiary and therefore he is a consumer”.

Sheth then approached the National Commission. In its order on 15 March 2017, the Commission stated “…from the affidavits of Chirag Natvarlal Sheth and Prakash Sheth (the complainant), it is amply proved that the bank telephonically contacted Chirag Sheth twice to verify whether or not he has given bearer cheque to the complainant and the account holder Chirag Sheth confirmed the said fact. From the above, it is clear that the bank officials were categorically informed by the account holder that he had issued the cheque and given it to Prakash Sheth. Therefore, he, in our view, was the beneficiary of the cheque and as such he is covered under the definition of consumer, which includes the beneficiary of the service hired or availed. Thus, the complaint is maintained.”

The NCDRC also pointed out that in response to an application under Right to Information (RTI) filed by the bank, a part of the response clearly states that, “the bank should not ordinarily insist on the presence of account holder for making cash withdrawals in case of ‘self’ or ‘bearer’ cheques unless the circumstances so warrant. The banks should pay self or bearer cheques taking usual precautions.”

“From this it is evident that Reserve Bank has cautioned banks in the country to be careful while encashing the bearer cheques if the amount exceeds Rs50,000 and insist on the verification of ID, as also the address. No doubt, the complainant had not furnished his ID, but the fact remains that admittedly not only the cashier but also the bank manager separately rang up the account holder on his mobile number, who verified having issued the subject cheque and gave clearance for encashment. The bank officials, however, declined to encash the cheque. This, in our view, is a clear deficiency in service.”

Another rule from RBI states, “In the event the individual tendering the instrument is not carrying the identity, and there is urgency to pay, the transaction to be referred to the branch manager. The branch manager shall make appropriate enquiries as deemed fit and shall use his discretion to allow the transaction. Such discretion to be used judiciously as strict one- off cases, only upon satisfactory confirmation of the bonafides of the transactions.”

The National Commission declared HDFC Bank’s stance in not honouring Sheth’s cheque as ‘deficiency of service’ and asked it to pay compensation of Rs10,000 to him for harassment and humiliation.

Prakash Sheth says, “Most banks harass such non-account holders who come with bearer cheques. Mine was perhaps the first challenge before a legal forum. This case will spread literacy amongst consumers or bearer cheque holders, and will hopefully be a lesson to similar banks who adopt this malpractice.”

Vinita Deshmukh
22 March 2017

http://www.moneylife.in/article/banks-cannot-insist-on-id-proof-to-cash-bearer-cheque/50044.html

FIXED INCOME Investor Interest 5% TDS if Rent over Rs50,000pm

March 18, 2017 yazdiLeave a comment

If a property-owner is getting a rent of more than Rs50,000 per month (pm), then the rent-payer is required to deduct tax at source (TDS) @5%. It will create a trail for the income-tax (I-T) department to ensure that the property-owner has shown the rent in her/ his tax returns and has paid the taxes. Anyone earning more than Rs6 lakh a year as rental income must declare it in the tax returns; but people find ways to circumvent it. Hence, a new Section,194-I B, has been introduced in Budget 2017. The proposed change is effective 1 June 2017.

To make for easier compliance, it is proposed that the rent-payer need not obtain a TAN (tax deduction and collection account number) and is required to deduct the tax only once in a financial year. The TDS has to be deposited through a challan-cum-statement, for which the PAN of the property-owner is needed. The tenant is not required to file a separate TDS return for this purpose.

It has also been proposed that “tax shall be deducted on such income at the time of credit of rent, for the last month of the previous year, or the last month of tenancy if the property is vacated during the year, to the account of the payee, or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier.”

For example, if you are paying a rent of Rs55,000 per month, payment of the rent for March 2018 will need deduction of 5% TDS on the total rent paid for FY17-18. TDS will be 5% of Rs55,000 for 12 months, i.e., Rs33,000. It is to be deposited with the I-T department. So, for the March 2018 rent, you pay the property-owner Rs55,000 minus Rs33,000, that is Rs22,000. If you vacate the place before March 2018, you will deduct the 5% TDS during the last month of your rent payment.

If you are a property-owner who shows the rental income in your tax returns, you don’t have to worry. Property-owners can take credit of TDS against their total tax due while filing tax returns. However, anyone getting a rent of over Rs6 lakh a year but unwilling to show it in tax returns, is asking for trouble. According to the existing laws, any renter who claims tax exemption under HRA will have to furnish the PAN of the property-owner if the annual rent exceeds Rs1 lakh. Moreover, the data will be available at the time of stamp duty/lease registration. Those who receive rental income need to properly report the income as the I-T department can easily find this information.

http://www.moneylife.in/article/5-percentage-tds-if-rent-over-rs50000pm/49970.html