Beware of Banking with HDFC Bank

HDFC bank seems to be set to redefine Banking. The most common purpose for which people hold Bank accounts is for operating a Savings Bank account where one can keep savings and use it as and when necessary by withdrawing the amount through cheques.

Negotiable Instruments Act says that one can draw cheques and make it payable to another person and when negotiated, he becomes the holder of the cheque entitled in his own right to demand payment of the money from the Bank. If the Bank refuses to pay for grounds not sustainable,  it would amount to a “Wrongful Dishonour” and the Bank would be liable to pay damages.

But no where in law it is stated that a person cannot issue an uncrossed cheque. The purpose of issuing an uncrossed cheque is to enable the payee to receive cash across the counter.

I donot think that the Reserve Bank of India has banned issue of uncrossed cheques. The only restriction in Banks is that if the amount exceeds say Rs 50000/- the reciepient may have to identify himself with PAN number if required.

However, HDFC Bank thinks that it can change the banking practice on its own and ensure that no account holder issues cheques payable in cash except when the account holder himself goes to the Bank to withdraw his funds through a self cheque.

In a strange practice, HDFC charges Rs 100/- plus service tax if you issue an uncrossed cheque and the payee draws cash at the counters of the Bank.

I also want HDFC Bank to reveal how much of money they have made on this account since September 2007 when the Bank seems to have introduced the charge.

I want share holders of HDFC Bank to raise this question in the next AGM and press to find out more about the various ways by which Banks exploit its customers.

I request Mr Vasudev, CMD of the Bank to explain if this is what they mean by Customer Service.

If HDFC Bank wants to charge for cheques issued and paid in cash they should print on the cheque leaves that only crossed cheques are allowed to be issued and also display this notice promptly in every branch.

If HDFC Bank does not want to deal with cash transactions with its customers, it is time they close all their branches and turn themselves into a virtual bank without any branches.

I request RBI and IBA to explain to the public whether this service  charge for payment of cheques in cash to third parties at the home branch of the customer is within the recommendations of the working group on customer service and reasonable.

If this charge is not in accordance with the recommendation of RBI guidelines, I request RBI to issue directions to HDFC Bank to refund the charge collected on this account to all the customers to whom it has been charged.

I have a feeling that RBI has lost control on what is happenning in the banking system and may be unaware of the customer unfriendly banking practices. Just as Banks discourage customers from dealing in established banking practices that does not suit them, RBI should also discourage Banks from doing business if their presence is not serving the community. Let them call themselves finance shops rather than Banks and lose the patronage of RBI and then see if they can attract the same level of business with or without HDFC brand name.