Sucheta Dalal :Not Wanted
Sucheta Dalal

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Not Wanted  

Aug 27, 2006

For Finance Minister P. Chidambaram it is a double whammy — he is a politician and a lawyer, two categories to whom foreign banks deny credit cards. In reality, the FM has had no problem getting credit cards but he has sympathetically asked Samajwadi Party member Amar Singh to approach the Banking Ombudsman for denial of a car loan by ABN Amro Bank. The FM expects the Ombudsman to “rap (foreign banks) on their knuckles”. To be fair, foreign banks are not alone in denying loans to certain categories of individuals; Indian private banks do it too. In fact, unless cleared by the top brass, they deny loans to politicians, lawyers, journalists and Chartered Accountants. Kotak Mahindra Bank even has an unstated policy of denying loans to single women, even if they hold good jobs. Public sector banks are also reluctant to give credit cards to three of these categories, but probably do not dare to deny politicians. However, it is unclear whether a complaint to the Ombudsman will actually lead to a rap on the knuckles. Firstly, the Ombudsman can hardly interfere with a bank’s credit assessment. Secondly, all banks — Foreign and Indian (both public sector and private) — have a horde of astonishing stories about how politicians and celebrities, including filmstars, cricketers, businessman and journalists attempt to ditch their credit card repayments or at least arm-twist banks to write off interest on late payments. Most often banks don’t dare to go public with the information because the publicity is damaging to their image. Ideally, the Ombudsman must only interfere if the borrower is able to establish unfair discrimination, which is notoriously difficult to prove.


Primary grievances


In fact, the Banking Ombudsman’s office already has its hands full redressing grievances about credit card companies that harass card holders through hidden fees. Or, impose charges that are only mentioned in small print at the back of account statements where they are seldom read. The latest we hear is the ‘non usage charge’ slapped on to card holders. Here is how it works. The bank first plies an existing card holder with a good record (primary card holder) to accept several add-on cards which s/he does not need and may not use. Since the bank usually insists that the cards are free, people accept them without much thought. However, six months later, the bank begins to charge the primary card holder a “non-usage fee” of Rs 250 if the card has never been used in six months. One outraged user, who had accepted an add-on card for his father (who never used it) and found himself paying for non-usage. Clearly, this charge ought to have been mentioned upfront rather than hidden in the card holder agreement. The card: Manhattan card by Stanchart.


Who is responsible?


At least four English channels continue to remain off the air in Mumbai after a do-gooder filed a Public Interest Litigation asking for a ban on adult fare that is openly beamed on television. This action set off a curious chain reaction that has hardly been in public interest. First, the Mumbai High Court pulled up the Mumbai Police for failing to stop cable-wallahs from beaming adult and pornographic fare. The police in turn raided cable TV operators and in several cases, sealed their decoders. They responded by pulling the plug on all of Mumbai’s televisions. Meanwhile the Mumbai police is completely aghast that the administration and the judiciary expect them to focus on moral policing (shutting down dance bars, closing pubs and eateries at 1 a.m. and now ensuring that no adult content is aired on television) when there are real threats to Mumbai’s security from terrorist groups. Meanwhile, the Information & Broadcasting Ministry actually has people whose designated job is to monitor television on a nationwide basis, but nobody has questioned them on their failure to do the job effectively.


Vanishing profits


There is a long list of companies that mislead investors about their corporate performance on a quarter-on-quarter basis with a view to ‘influence’ the market price. These companies report profits for three quarters (since the results are unaudited) and admit a loss when audited accounts have to be provided for the entire year. An investor wrote to me about Syschem India (formerly Anil Pesticides) as a probable candidate of such manipulation. The company reported excellent numbers for the first three quarters, suggesting a breakthrough in its attempt to get into Specialty Chemicals. In the last quarter, the company suddenly announced negative revenues that wiped out the entire profit claimed in the earlier periods, under the ruse that its products were rejected on quality grounds. Stock Exchanges mechanically post the results on their websites, making no attempt whatsoever to verify the claims. As this column has repeatedly argued, this makes a mockery of Clause 49 of the Listing Agreement of stock exchanges that lays down stringent rules regarding corporate announcements but can do nothing about the ease with which they are flouted.


-- Sucheta Dalal