Political parties in India are not required to account for small cash donations. This has been used to do much evil in India. Political parties should consider exchanging the troublesome notes for citizens as donations received and returned (for whatever reason, including "demonetisation") and get the notes exchanged in bulk at the RBI (or deposited into their bank accounts and withdrawn as legal tender for further exchange).

The RBI cannot shrug off liability for these notes on whim.


In current cash strapped circumstances, with banks no longer exchanging cash, the common man can hardly walk up on a daily basis to the RBI. It is an open secret that political parties can be and are used to launder money. For once, this laundering of exchange would actually be in the larger public good.

It is also an open secret that political parties spend considerable amounts of money to "buy" votes. This wouldn't need them to spend a thing beyond the expenses of their own volunteers.

An open political campaign such as this would be a good protest move, help people and encourage them to feel an affinity with your local party office resulting in a win-win situation for citizens as well as political parties. Where distance deems it suitable, exchange and protest marches to RBI for exchange would allow people usually intimidated by the idea of approaching RBI to find comfort in numbers.

Even better, it would save political parties a hell of a lot of money they usually spend on voters, when they help voters survive the BJP. This matters when fighting a party as well funded as the BJP.

Note: I oppose opaque funding in political parties. I believe it violates the voter's right to information on influences acting on the candidate they vote for. However, since parties have resisted transparency in accounts, in this instance I believe that it should at least be used for some good, for once.


Does the demonetisation of 500 and 1000 rupee notes really benefit India? To what extent? What is the cost to benefit? How do we measure success? And more questions.

Let us for a moment forget the plight of the many small vendors and businessmen who are basically busy sinking while enough people get enough cash in hand at the very limited rates allowed by the government to bother with the non-essentials they are selling. Let us forget about medical emergencies and people dropping dead in front of banks or committing suicide. Let us forget about any problems people face - however huge - and dismiss them as "inconveniences" (I believe that is the euphemism of the hour the government wants us to remember) toward a larger goal. Since the government's talk is all about strengthening India's economy, security, preventing black money, preventing terrorist funding, etc.... let us understand clearly this larger goal we are suffering inconveniences for.

[For the record, what you and I suffer are inconveniences, I have met small vendors by the dozens these last few days and what they suffer is described better as economic devastation, but going with the term given the abundance of people who couldn't care less what people not them suffer.]

Here are some questions.

What is black money?

Ignoring that the supporters of the government are currently bullying anyone questioning the government as a hoarder of black money, let us look at this phrase. It is basically unaccounted money. It is money that is earned or received that the government does not receive tax on. So basically, it is the transaction that determines whether the money is black or not. For example, you purchase something with cash you got as salary that you withdraw from an ATM, get a receipt for it and the seller accounts for it and pays tax on it, your entire journey of the money is "white" - even if you made a cash purchase. You got cash in envelopes from relatives on your wedding, which you didn't declare as an income, but spent it, you spent black money. If the seller still gave you a receipt and paid his dues on it, you spent black money, but it is white on the trader's end. Now here is the question. You withdrew some money from the ATM from your salary and you have some money you got as a gift. Which note in your pocket is white and which one is black? Is it the notes themselves or the amounts based on sources? If you receive an online payment for some fictional item which you never sold, but gave an invoice for... Seems to me, thinking of black money as being like black sheep that you could herd into a corner and take to slaughter is a bit simplistic.

Does size matter? How big is too big?

Seems to me that currency makes sense for exchange. For storing, there are more compact methods. It isn't just a 1000 rupee note that is smaller than a 100 rupee note. You could probably swallow a lakh worth of gold without any health issues or less hideously, you could tuck it into a corner of your wallet and it would be so small, you could flash your wallet to show it was "empty" when it carried a lakh worth of gold. "Storing" black money as currency notes makes little sense. If it is to be used in transactions, the transactions will already be a cover up in place and even if they weren't, the work into tracing them wouldn't be different for old or new notes (unless you really fell for the news of the 2000 rupee note that screams if you use it as black money).

How does "sudden" matter?

While there is a brief logic in the entire population being wary of large quantities of notes and thus less likely to unwittingly launder it for someone, the black money owner has about as much time to launder his money in as you or me. While we may think of minor hacks like withdrawing from different banks to get more than 4000 rupees in 14 days (because really, you like pizza, and that's less than 8 days of pizza assuming you spent on nothing else), big black money holders will likely have way more experience at juggling money as well (not to mention plenty of white money to claim it to be if questioned). Sure, exceptional idiots could have managed to amount vast amounts of currency and be too stupid to evade capture, but really, how many would they be? Why, just last month, this diamond merchant from Surat gifted 400 flats and 1000 cars to his employees. The cars were gifts while the more expensive flats were on EMIs of which the company paid a sum. Now, if the returns he gets on these are over time, he successfully vanished a hell of a lot of money just before this ambush and will likely get it back in tidy white installments as the dust dies down. Of course his money may have been white. Just a hypothetical question. From all accounts, this chap seems to be a serial gifter (not that that is any proof of white money, just saying), but an example of what could be done.

In any case, with clear evidence that BJP officials had advance information, certain economic elite had advance information, etc... pretty much the only people to be caught unawares seem to be the gullible citizens so far. Certainly there seems to be no exceptional news of recoveries, though many raids, and heck even inspection of passengers in trains has been reported. If it is about causing panic, it is quite illogical to think that a person with plenty of money will panic before a person with little due to a strangling of cash flow (which is most of the country). You could drive small businesses to extinction and still have the big black players patiently changing some money at a time along with them right to the end. Or just take some loss and change it at lesser value in the black market the government so obligingly created with its abrupt scare tactics. Or perhaps they already got the gold and changed their roomful of cash into a purseful of gold that they put in a bank locker.

Do we have the capabilities for getting intelligence on big money movements?

Say someone uses an Aadhaar card to change 4000 rupees in a bank branch. For good measure, they take along their wife, maid, driver and driver's girlfriend (or whatever, just hire a few... if you get my drift). Then the next bank branch, then the next bank branch and so on.... The next day, the same bunch more or less returns with PAN cards. Day after that is voter ID day, and so on... till fourteen days are over and they can withdraw from the first again. Or just steal some identities. Heck, International couriers have databases. Would the bank even be able to alert tax authorities about abnormal exchanges? Add to that these people withdraw 20k a week in cash from their account, then return in a few days with the defunct currency and dump in 20k.... and so on. What about say.... hiring the maid's neighbourhood people who are struggling for cash and tell them to take a couple of hundred for every 4k exchanged...

Then of course there are stories of people offering cash loans worth 2 lakh in old currency without interest or at low interest to be returned later. Mostly poor people barely using their bank accounts deposit the 2 lakh cash.... There are student bank accounts that were recently showed to be used to hide money. Anyway, is it really impossible to create a totally fake new Aadhaar and open a Jan Dhan account and dump the money there? Or just borrow accounts wholesale? All you need is a harassed looking housewife type woman. Does anyone think they will get tracked when the Tax people are essentially monitoring the whole freaking country at one go?

How long does it take to create fake currency?

A lot of people are saying that this isn't about black money, but fake currency. Dawood/ISI/other anti-national elements will be disrupted when the fake currency they have loses value. Not sure of that, but the whole freaking country is disrupted because the REAL currency we have has lost value. And it is unclear what prevents fake currency from being legitimized as new notes. It is true that once the switch is over and the existing notes are properly declared dead and can no longer be exchanged (not sure when that will realistically be), the notes counterfeit currency makers make, will have no value. Then the question remains about how permanent this situation is. If someone is in the currency business, I imagine it isn't all that different from the piracy business. New security measures simply mean a race to find a crack, as opposed to a change of occupation and giving up of counterfeiting or piracy. And we haven't even added security measures beyond the notes they already are able to duplicate. They already have distribution channels that we haven't been able to seal (or we wouldn't need to change currency). They have the intent, clearly. So what are the methods we have to prevent the note from being duplicated or at least copied enough to fool people and how long can this protection be reasonably expected to last?

Given the lunacy of "cashless", how long are people expected to survive without money?

Cashless is a lunatic idea. Not even government departments like the post office accept cashless payments. Various offices and forms want cash fees. Large swathes of India have connectivity problem due to remoteness or politics - for example the Kashmiri asking how they were supposed to go cashless when they had no mobile internet for 129 days of the year. When someone like me (and imagine you too) has limited cash, it isn't a very huge issue. You pay your bills, rent with transfers, you make purchases online and have them delivered and so on. At best you suffer for fresh vegetables or have to use app based cabs instead of whatever you can flag down. When someone using cash in daily life runs out of cash, everything comes to a standstill. If they stay in a place with rent 2000 rupees and get a 300 rupee electricity bill, all they have left for the next 14 days is 1700 rupees to cover everything from school fees to vegetables and milk and groceries.

We are agreed that we don't care of the plight of these people who don't matter. But what do we do about the market losses from the drops in sales that go all the way from small sellers to middlemen and distributors and manufacturers and.... um... the tax department at most stages? What do we do about losses from perishables like vegetables or fish? What do we do about security concerns when these people who don't matter bring their "inconveniences" to where our nose begins? And this is not hypothetical. We already have anger at various places. For a leader who was mostly respected, at least publicly, the last 24 hours have seen a disturbing number of abuse videos addressed to Modi. Staunch allies like Shiv Sena and RSS have gone on record criticizing this move.  Economists are muttering about impact on GDP. Stocks have tanked (you realize that just covers five major vote banks for the ruling government?). So yes, anger is definitely the writing on the wall.

Are we certain that enough of this mythical black money will be caught to justify all this? Which brings me to...

Is this yet another bank bailout by forcing people to put money in banks?

There is a lot of talk about black market economy and bringing money under the tax regime, etc. Given that this move worst hits those unlikely to be eligible for tax, one wonders what is achieved. It is possible that those people simply don't matter, so are treated like dirt and I wouldn't be surprised, except elections are coming up in several states. This is the time when citizens are suddenly valuable. It is nothing short of suicidal for BJP to devastate the poor so thoroughly. Which means there is some reason to it. And the only one I can think of is this thing called recapitalization. We need to get money under the tax regime, but it has always been money we didn't have and thus don't depend on. Getting suicidal chasing it makes no sense either. Which leaves the mismanaged banks and their godawful NPAs threatening to sink them. Given that a hell of the biggest NPAs are by names known to be close to te government (and other politicians), it is looking unlikely that banks are going to do it how it is supposed to be done. The government has given money to banks in various ways. The last two are dramatic because they got funded by money belonging to people. The gas subsidies being routed through banks as cash was rather illogically explained that people were better off getting a subsidy refund instead of not paying the money at all in the first place.

This forced a hell of a lot of Indians to create Aadhaar cards and bank accounts that are still used for absolutely nothing else but that - getting what is due to them. This basically lets the banks keep the subsidy money with them for a while till it is withdrawn, and who knows, with any luck, it may be saved or even added to and the deposits will grow. Obviously it doesn't seem to have happened much r at least enough to matter to the blackhoe in the bank finances. So now we have this. The whole country thrown into turmoil by literally forcing people to put most of the cash in the country to banks - just to try and get as many people as possible to put money in banks. No matter what it costs the people in losses, life and everything in between. You could call it a crowd funded bailout of cronies. Some funding was put in banks, other funding was spent as extravagant losses to citizens as a part of implementation. Whether people end up putting even a rupee in the bank or not, by god they will have paid for the government's scheme. I suppose we should pray at this point that the banks figure out how to run themselves or we may find ourselves with our accounts simply "frozen" in the name of "patriotism".

Speaking of NPAs...

The banks are in crisis with NPAs. The larger ones have got a lot of attention. The question is what will this demonetization do to the smaller ones. Or for that matter other loans. There is a lot of talk about the lending capacity of banks improving. Few seem to be thinking that with the kind of business losses smaller businesses are taking, we may not just be destroying them (which we agree doesn't matter), but the attempt to bail out the banks may simply add to their NPAs. Not to mention loss of deposits from businesses that don't have loans but go under anyway or savings from people who suffer losses or loss of income. For example, what do you think is going on with the taxi guy who got the taxi with a loan and for a long time is unlikely to find enough income from it? Will the money created for the banks with what amounts to little more than bullying be worth it or at least be more than it?

Speaking of keeping money in banks...

It is barely a couple of weeks that serious security issues in ATMs resulted in debit cards being misused. Now we have the entire country being pushed to withdrawing cash from ATMs over and over till they have normal amounts of cash with them again. It is unclear what security was added to prevent a repeat before an unprecedented number of cards were sent seeking ATMs. Nor is it clear what actions were taken to recover the losses. No information on ANY online theft being solved and the guilty punished. No assurance that it can't happen again. Already Swaraj Barooah reports on Twitter that he got a phonecall asking for his card information to unlock his card. Such a large movement is hunting grounds for scammers. What preparations do we have? Or are people to simply put their money in banks on blind faith - mostly because they were forced to?

Or for that matter cashless transactions

There is an overall push for people to switch to cashless transactions. Presumably because some bright person somewhere thinks squeezing tax out of every single transaction is more important than people's money or rights. A person who withdraws a thousand rupees to do the week's vegetable shopping and a person who does 10 transactions worth a thousand rupees. With transaction fees on each transaction, the additional 20 or 30 rupees may not matter to the modern Marie Antoinettes, but it sure does to the vast majority of India where 20 rupees is two bundles of spinach or half a kilo of sugar. Why does the citizen have to pay for the government's mistrust in its citizens that makes it want to know the smallest thing they buy? If the government is so desperate for that detail of information, let them make transactions free. Cashless doesn't become cheaper than paper currency, does it, if a thousand rupee note can be printed for 3-4 rupees one time, instead of every time it is used. Cashless is "cheap" for the government only because it is people paying for the unit of exchange and not the government. If currency incurred a cost with every use, even 0.01 rs per use would seem exorbitant. But people are expected to pay many times the cost RBI would pay for a paper note as their duty? Those who can afford it may do it for convenience, but the government cannot force citizens to fund use of national currency - that too with third parties!

Anyway, this is getting too long. These are plenty of questions for now.


Two nights ago, Modi suddenly appeared on TV and told people that the currency notes for Rs. 500 and Rs. 1000 would not be legal tender after midnight and anyone accepting them did so at their own risk. Then followed information on how how people could deposit them into banks or exchange them for legal 100 rupee notes at banks and post offices. There also followed information on places that could still accept the notes for an additional 72 hours, like government hospitals, petrol pumps, railway counters, etc. Banks wouldn't work the next day and ATMs wouldn't work for the next two days. New currency for Rs. 500 and Rs. 2000 would be issued after three weeks. Don't panic, he said, you will get your money back or something. He has vanished since then, even gone abroad while the country faces chaos and did panic.

What this meant was that the people had absolutely no chance to organize themselves and plan their finances for the near future. People stopped accepting those notes well before midnight. Others rushed to ATMs, which was a bad move, since most ATMs nationwide give only Rs. 500 and Rs. 1000 notes and only a select few dispense Rs. 100s - which was the need of the hour. Those emptied fast.

What ensued was absolute chaos. While stating that petrol pumps and railway counters and such would accept the banned currency, the government had done zero to ensure that they had adequate legal currency to offer back in change and necessity soon forced these places to stop accepting the banned notes, regardless of what the Fuhrer had decreed. As outrage grew, hasty additions were made to the list that would accept the banned currencies like all hospitals, medical stores and such. Frankly, on the ground and in order to be able to do any business at all, it translated to pretty much anyone with enough change to return for the banned notes accepted them.

It didn't work, as people held on to the increasingly scarce Rs. 100 notes for necessity and local economies ground to a halt. By morning, the situation was clear. Shops accepting cards and such (mostly in the metros) continued to do business, while small town areas like ours were completely shut in the day - there was no money to do transactions with anyone.

By the evening, the classic Indian jugaad had helped some more, and solutions like doing purchases worth the cost of the banned notes was practiced (absolutely everywhere, not just in government listed places). A few places like medical stores took to issuing notes signed by the owner for the balance amounts that could later be exchanged for medicines. But such trade was largely limited to essentials. The economy basically ground to a halt.

The complete abruptness of the move resulted in enough lack of information to do irreparable harm. From money being abandoned or burned to a heart attack from shock that the hard saved 2k a woman was to deposit in the bank was no longer a legal note. Another woman in Telangana sold her land for 50 lakh in cash and committed suicide on discovering the ban, believing that her notes were now worthless. People with weddings in the family were completely stumped for money. Necessities from cooking fuel to vegetables were out of the reach of people. There simply wasn't enough cash for transactions to happen.

There was panic over urgent needs for cash, medical emergencies, travel, weddings and other functions, bill payments and more. Many couldn't afford food. Sellers of perishables made huge losses because their investment spoiled before people had money to buy it.

A thriving black market bloomed overnight that will vanish just as untraceably later over - ironically - national currency. People desperate for money to buy things accepted change for a lesser amount (varied from Rs. 300 to Rs. 450 for every Rs.500 note). Television channels were monuments to the absurd, loudly proclaiming "noton ki jabardast black market" (Black market of currency) one moment and how this move was preventing corruption black money (the government script) at the other.

Supporters of the ruling party took to suggesting anyone who criticized this to be hoarding black money. Others helpfully suggested cashless wallets (incidentally, the Prime Minister appears to have promoted one coinciding with this ban, raising all kinds of questions from quid pro quo to propriety). There was an abundance of information on how to deposit, withdraw or exchange cash. Except.... the banks were closed, as were the ATMs.

By the end of the day, the devastation this move had caused people - and particularly the poor - was so obvious that the need to rapidly return cash to people was beyond obvious, and the government decided that the banks would immediately start supplying the new currency notes for Rs. 500 and Rs. 2000 when they opened. This announcement was pretty much a declaration of the failure to curb black money (or whatever it is the government imagined it was curbing) by strangling the cash flow of the whole country, as the Prime Minister himself had stated that the higher value (also debatable when a large pizza costs more than Rs. 500) notes encouraged hoarding and that is why their ban was a step toward clean money. Not only would new higher value notes be right there, there was one that was higher than the value of any currency circulating so far. But then our ruling party isn't famous for logic.

The new day began with more of the same. Cash shortages. ATMs closed. Banks, supposed to open early, as per government propaganda, mostly didn't. In any case, by 11am, news of banks running out of cash started hitting social media. The situation on the ground is mostly unchanged, because the few people who have been able to exchange currency simply haven't got enough currency in hand to spend it unless necessary. Being able to officially exchange only Rs. 4000 in 14 days makes a mockery of living costs in India. Though of course, people immediately found ways around that - going to multiple banks, using different ID proofs each time, etc. But the fact remains that not even 1% of the population was able to get their hands on usable cash. And no one has so much that they would send it right back into the market with transactions (I also suspect the black market the government has so helpfully invented traps and trades any that circulate, instead of merely using it to provide change at real value).

While some got their cash without much hassle, many spent hours in queues and increasingly angry crowd only to discover that banks had run out of money. Daily wagers lost wages trying to get money, only to not get it and be forced to try again tomorrow. The alternative, of course was to lose anything between 10% and 20% of the value of their hard-earned money and change it in the black market. And this black market was the complete creation of Modi and his government because of their absurdly short notice on the ban and closing of banks immediately after announcing it. While the government propaganda suggests that such suddenness was necessary to prevent illegal hoarders from planning their moves, they can still plan their moves, since the government not being able to replace it rapidly will mean that they have a long time to plan and do it in, just like the other citizens - and particularly the government, which doesn't seem to have realized the mathematical difficulty of replacing 86% of the nation's currency with 14% of the nation's currency and been caught completely unprepared for the results of their own actions.

What is worse, is an insecurity and mistrust about the government and national currency. Talking with people on the street "How can they do this? How can they just cancel our money any time they want?" was a recurring sentiment. People are scared of losing their money. Even when they get their hands on legal cash, it will be a while before anyone forgets that their hard earned money could be rendered worthless on whim and they could suffer for necessities even after working hard and earning enough and the government actions have shown that it is inclined to act on such whims for the sake of drama that is literally funded by the people with insecurity, deprivation, losses of income, inconvenience, sometimes loss of life or social status or money in the black market. As an angry woman put it "How can the government force me to buy my own hard earned Rs.500 for Rs. 400 or not have food for dinner? What is the meaning of this? Why have government guaranteed notes if they can be banned without warning?" People are angry about the ruling party. What is worse, they are in a new position of having to factor in such losses. Ironically, this appears to have made people MORE inclined to hoard money, not less. Most people I asked said that they would now try to keep a larger emergency buffer of money at home and this time would make sure that they had notes of different denominations. Though of course, they still had nowhere near enough for immediate needs, let alone the hoarding they were planning.

Regardless, by afternoon, the government was now making noises about a Rs. 1000 note as well to be introduced. Essentially, it means that the whole tamasha does mostly nothing useful. Not just are the denominations targeted to remain in circulation, an additional and higher denomination has been added while talking of high value notes increasing corruption.

Given that one five hundred rupee note will be replaced by five one hundred rupee notes that no one wants to part with, at the slow pace people are getting money, it is going to be a long and painful time before normalcy returns.

This is what happened. Part 2: will look at this situation with more analysis of other factors and fact checking.

Mumbai, 24 October, 2016: Ekta Group of builders cheats and bullies its customers – no two ways about it. Don't be fooled by clever PR campaigns, paid mediabeautiful website, and estate agents. Don't get taken in by endorsements of reputed corporate like HDFC RealtyHDFC Red, or mentions in Magic Bricks Now. Don't get fooled by Anil Kapoor's endorsement and MCHI-Credai Awards for Customer Responsiveness. That's all smokescreen. The ground-reality is that Ekta Group, also known as Ekta World, is shamelessly unreliable. Booking a flat in an Ekta project means giving lakhs of rupees with no safeguards and no legal entitlements. Even when the flat-agreement is registered, it is an unfair, one-sided agreement that make you lose all your rights as a flat purchaser. Ekta builder's overall strategy is to make the buyer helpless. As they say in market language,"Builder ko haath kaatke de dene jaisa hai" -- like cutting off your hands and giving them to the builder!
Why are we making such harsh statements against a reputed builder? If you don't like long explanations, just read (1)brochure of Ekta Parksville and (2) flat-purchase agreement for Ekta Parksville. The brochure is full of rosy promises, whereas the sale agreement tells you that you have no rights and no legal entitlements at all. Builder ka sab kuch, buyer ka kuch nahin!The agreement is nothing but bhai-giri made out in legal language. Investors who have got the point can stop reading and go look for other places to put their hard earned money. Others, who want explanations, can continue reading about the actual experience of a customer. 
{Click to read the rebuttal to this press release by Ekta World CMD Ashok Mohanani OR continue reading the story of a flat-buyer below.}
The story of a flat-buyer:
  1. Five years ago, Vineet Malik of Gurgaon applied for a flat in Ekta Parksville project in Virar, at a price of Rs 26 lakhs. The first demand for payment by Ekta Parksville Homes Pvt. Ltd. came in November 2011. This amount was promptly paid. The verbal commitment given to him was that the flat would be delivered by December 2013 i.e. two years later.
  1. Four years later, in November 2015, the last demand note was sent by Ekta Parksville Homes Pvt. Ltd. Although 95% of the total consideration had already been paid, the flat-purchase agreement was not yet signed. The buyer was at the builder's mercy; the builder could break the deal even now.
  1. In March 2016, although the buyer had paid 97% of the total consideration, Ekta continued to refer to the deal as "provisional booking". See this indemnity bond given by the buyer.
  1. In May 2016, finally, the Flat Purchase Agreement was registered. (MOFA requires registered agreement at the time of receiving 20% of the total consideration, but these builders are laws unto themselves!) The agreement was full of discriminatory clauses making the buyer renounce all his legal rights. In a nutshell, the agreement says that flat-owner is only the owner of the four walls of his house, and he has no say in the common amenities promised in the lavish brochure. (Even if the builder reduces any or all of the amenities, and exploits the FSI of the land and/or any common area of the building, the flat-owner must keep quiet! Is this the kind of agreement one expects from a reputed builder?)
  1. According to the recently signed agreement, the promised date for giving possession is December 2016. But, judging from the current construction status, this promise will be broken. The entire site is under-construction; there is no way it can be completed for giving possession within two months. Buyers will be lucky to get possession even on December 2017!
These two pictures sum up the situation:
The flat purchase agreement says that flat-owner is only the owner of the four walls of his house, and he has no say in the common amenities promised in the lavish brochure.
Ekta Parksville – What was promised
The flat purchase agreement says that flat-owner is only the owner of the four walls of his house, and he has no say in the common amenities promised in the lavish brochure.
Ekta Parksville – What will be delivered in December 2016
In our next article, we will look at the discriminatory clauses in the flat-purchase Agreement which negate the lawful entitlements of the flat-purchaser.
Meanwhile, call us and share your own experiences regarding Ekta's projects.
[Acknowledgment: Thank you activist Sulaiman Bhimani for research and groundwork.]
Krishnaraj Rao
98215 88114


Sulaiman Bhimani


HDFC Bank: Pawn your wife's gold now -- No documents needed!

 9th October, 2016: A lot of HDFC Bank customers are having a bad experience. Some are even having nightmarish experiences... and it's all thanks to the fine art of glibly selling them financial instruments and other stuff they don't need. One friend who wrote to me after reading my recent article about how HDFC Bank routinely abuses it's customer's trust and fiduciary relationship, saying, "Krish, your gripe about HDFC Bank exceeding the limits of fiduciary relationship is absolutely correct. But why pick on HDFC alone? I get similar spam mails from ICICI, Kotak, etc. Upon complaining, I was told to read the last line of these mails and unsubscribe if I did not want to receive such mails."
My reply to his query: "I picked HDFC because I have experience of its activities at first hand. But I also wrote about SBI Mutual and ICICI Bank in that article."
And then my friend wrote: "Here's a promo mail from AXIS Bank."
What we can see is, Axis Bank, while promoting its own credit card business, simultaneously markets multiple third-party brands. Such marketing emails violate Section 8 of the Banking Regulation Act, 1949 (Amended in 2013), which says: "Prohibition of trading... No banking company shall directly or indirectly deal in the buying or selling or bartering of goods... or engage in any trade, or buy, sell or barter goods for others..." Section 6 of the Act lists what kind of businesses banks may engage in. Promoting apparels, malls, superstores etc. is not permissible.
Axis Bank's promotional email is followed by a lengthy disclaimer that threatens you and denies everything. But enough about product sales. Selling insurance products is not a legitimate banking business either, but see this email from HDFC Bank:

The bank's customer feels helpless to click "Unsubscribe" or mark such emails as spam, as they are bundled with emailed accounts statements. Saying no to spam means saying no to email statements.
HDFC Bank branches are sales points for a lot of stuff. They surround you with posters, standees, pamphlets and young relationship managers chasing monthly targets. Ask anyone for your account balance --- and you lay yourself wide open to HDFC's hardsell. Give someone your customer id and you give him access to find out how much money you have in fixed deposits, and when they mature.
HDFC Bank markets Gold Loans as an impulse purchase. "45 minutes, no paperwork" is HDFC Bank's promise. So if you are a market speculator with an itch to invest in some hot scrip, you need a few lakhs to fund this impulse purchase, and you need it now. HDFC Bank says, "Psst, psst. Raid your wife's jewelry cupboard and pawn her gold. WE WON'T ASK YOU ANY QUESTIONS! DO IT NOW.
45 minutes, no paperwork -- overdraft against Gold Jewellery
Or, you are a housewife who has the urge to splurge without consulting her family. To her, HDFC Bank is saying, "Just go ahead, honey, pledge your gold. DON'T THINK, JUST DO IT NOW! Live for the moment!"
Having pawned off their gold, HDFC Bank's customers find that the bank personnel can armtwist or blackmail. Read this complaint from an aggrieved customer in Mumbai: "I the undersigned holding Gold Loan A/c. No. 21114 with your esteemed HDFC Bank, Yogi Nagar Branch for Rs. 130,200/-. Last week I visited your Yogi Nagar Branch for renewal of my Gold Loan. I meet Lady Officer (name unknown) and informed her to renew the same and asked about details for the same. She refused to provide any details and filled one cash deposit slip with account number details and amount and told me to pay Rs.11680/- to the Teller. I paid the same at the Teller and given the Counterslip to that lady. She cross/cutted the account number mentioned on it and given it to me back. The said renewal charges are not accounted to my loan account but deposited in her personal account... She has also not given the Renewal documents for Gold Loan and refused to provide the same."
Since documentation is minimized, so are safeguards against abuse. Relationship managers and other para-banking employees can play mischief. There are sad stories unfolding all over the country in the name of gold loans.
Krishnaraj Rao
Sulaiman Bhimani
Note: Next article is about the nightmare of an HDFC Bank customer from whose accout thousands of rupees are being deducted every month against his will through Electronic Clearing System (ECS), thanks to HDFC Bank's ability to toss documentation to the winds. Dekhiye iss dharavahik ki "ugly" kadee 🙂