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Hidden charges are hidden

A lot of readers have sent questions on the functioning of banks and sought some clarifications because this column has rightly earned a name for itself in handling important issues of the day (Friday) with the much-needed clarity to trivialize them.

Over to your queries:

Recently banks have decided to put a ‘cap’ on the number of withdrawals from ATMs by an individual. If the ‘capped’ limit per month is exceeded, an extra charge is to be levied. My question is why do the banks have to charge me for withdrawing my own money that I have technically lent to them? It is not as if they take my money for long walks in the beach or give it a back rub?

Hah! We can detect some sly sarcasm in your question. You are right inasmuch as the banks don’t take your money on walks or massage it professionally. But it is a fact —- we have verified this with the RBI — that they indeed provide your money potty training, the importance of which can never be overstated considering that when you withdraw money from the ATM you mostly keep it in your wallet that you shove into the back pocket of your pants. On occasions, when they are in the mood for it, bank staff also sing lullabies to your money.

You guys are kidding, aren’t you?

Yeah, we know we sound ludicrous. But it is not even half ludicrous as some of the actual RBI rules are. For instance: when someone gives you a cheque and you present it to your bank and the cheque bounces, your bank will rightly levy a penal charge on the obvious villain in the transaction: You. You may ask what mistake you committed. Our answer is you erred in leaving some money in your account while the guy who gave you the cheque had the prudential intelligence to leave it empty.

Okay, before the arrival of ATMs, what was the charge levied for withdrawal of money?

You are making us nostalgic for those uncomplicated times. Back then banking was pretty transparent, and all you had to do to withdraw money was: get to the nearest bank (situated 50 kms away), write out a cheque or fill a simple withdrawal form, give it to the clerk concerned, and, voila, you will be informed that the cashier is on leave and asked to come on the day he rejoins duty. If he had, for some unfortunate reason, passed away, you had to write off your money. Practically, robbery was easier than withdrawal via normal banking route. Also, banks built on their deposits by hiring goondas to kill off their cashiers.

Staying with the past, what did the banks do with the money you put in them as deposits?

Do you remember the days that you, as a kid, used to place a peacock feather between two pages of a book and hope that by morning it would give birth to another one? This also turned out to be the official policy of the RBI. For, the money in your account did not grow any more than the peacock feather that you shoved between pages of a book did.

As I see it there are no charges for money transfer through internet. So am I better off opting for internet banking?

When you talk of internet banking, comfort and convenience are two words that we would come up with because to use better words we would need a dictionary.

Internet banking, contrary to popular belief, is safe and secure as long as you take simple and basic precautions, like somehow being a supercomputer, which alone can, of course, remember the 16-digit account number. With such account numbers we frankly don’t see the need for passwords any further.

Can you tell us about the functions of the RBI?

One of the main tasks of the RBI is to help tackle inflation which, as the famed German economist Ludwig Langer succinctly put it, ‘is always doing something or the other’. If the RBI manages to tame inflation, most likely the growth rate will take a beating. If growth rate can be kept robust, the inflation rate will obviously be a cause for concern. In the event, the RBI’s principal task is to keep at least one thing at a worrisome level so that its staff can continue to retain their jobs and earn their salary.

RBI also regularly tweaks CRR, SLR, Nikon SLR rates, not dissimilar to the way you play around with the volume knob of your music system while driving. The point being one way or the other it wouldn’t make any intrinsic difference. But you would think that it does.

What are RBI chief Raghuram Rajan’s credentials?

Raghuram, as you would rightly expect the RBI chief to be, is a qualified engineer from IIT, Delhi. He went on to do a post-graduate management degree at IIM, Ahmedabad and followed it with a Ph. d in MIT to eventually end up as a medical doctor, going by the title of his book: Fault Lines: How Hidden Fractures Still Threaten the World Economy.

Thanks for answering all our questions patiently on the various hidden charges…

Never mind. Pleasure is ours. Also, it would be Rs.5,000. We accept cash only.