What a goof up: HDFC bank deducts Rs 1.4 lakh for a card that was never delivered

Reuters

FP : Bindisha Sarang: 59 mins ago:12 june 2013

What happened: The bank had deducted money from Sunil Kumar Kushwaha’s account for the usage of a credit card that was never delivered to him though the bank did refund the amount after almost a month. In fact, it was the bank which had mistakenly delivered the card to an incorrect address, and later deducted the due amount from his account without even giving him a notice. Since he never received the card, the charges which were made on the card were made by someone else.

And even though the card was used by someone else, he got threatening calls from collection agents, despite his explanations. Then HDFC Bank deducted an amount of over Rs 1.35 lakh from him, he had alleged.

Reuters

The forum also observed that since banks are custodians of public money, such action of HDFC was “highly objectionable, illegal and condemnable” and the complainant is entitled to be reasonably compensated for that.

HDFC in its written statement had refuted the allegations made by Kushwaha.

Important things to remember: In fact, that’s why Firstpost has been saying for a while now that having a credit card with your own bank may be a bad idea. Of course, having a credit card with the same bank you have a savings account with, makes it very easy to pay the bill. Not to mention, that when you have more than one banking relationship with a particular bank, you usually enjoy some unwritten benefits. But, as they say- every coin has two sides; whereas on one hand you get convenience, on the other hand (in case you fail to pay the bill), you may face a pretty tough situation. And in such a case, having the same banks credit card can turn out to be a costly affair.

Right of Lien: Reason being, three words “Right of Lien.” Let’s be honest, neither do we have the time nor the patience to read the credit card’s Terms and Conditions (T&C). “Right of Lien” is one such clause mentioned in your cards T&C, which you agree upon (without even reading) when you agree to accept (use) the card.

In lay terms, Right of Lien is a right which a bank has to recover dues from your savings banks account for any unpaid credit card or unpaid loan. This right is a legal right and falls under Indian Contract Act.  As far as your bank goes, this right permits the bank to sell your goods and securities when you do not settle dues. When you accept to use the card, this right gives the bank the right to freeze your savings accounts and deduct the credit card dues from your savings account, in case of default. Of course banks are supposed to give you a notice before you they do so.

Today more and more people are using credit cards to shop online, pay utility bills and buy movie tickets. Let’s not forget that online credit card frauds are increasing each day (India being one country which has maximum number of online credit card frauds), there is a good possibility that you might have a dispute about a bill or transaction with your bank on your card.  When you find yourself in such a place, and you don’t pay the disputed amount, your bank might just freeze your savings account and recover the dues.

We suggest you visit your bank’s website and read the T&C’s. Ensure you pay your bills on time, use caution while shopping online (one major reason for disputes is online transactions) and avoid taking future cards ffrom the bank you bank with.

Sunil Kumar Kushwaha was lucky that the consumer forum ordered HDFC bank to compensate him Rs 50,000. But without a doubt this issue might have been an uphill fight. May be it was a genuine mistake from the bank’s side, but with the number of frauds happening these day, you surely don’t want banks to deduct funds from your account for disputed card amounts. Hence, best to not have the same bank’s credit card where you have a savings account. And let’s hope that banks will learn to send cards to correct addresses in the future.

With PTI inputs

Bizarre! Bank employee transfers millions after falling asleep on keyboard

by FP :Staff :AFP : Jun 11, 2013

A German bank employee falling asleep on his keyboard reportedly accidentally resulted in the transfer of 222 million euro ($293 million) instead of 62.40 euros to an individual’s account.

According to an AFP  report, the bank employee was supposed to transfer just 62.40 euros to a bank account belonging to a retiree, but instead “fell asleep for an instant, while pushing onto the number 2 key on the keyboard” — effectively making it a transfer of a whopping 222,222,222.22 euros

However, as soon as the bank discovered the mistake, they corrected the error.

But this obviously tired man did not have to face the heat. 

Instead, a 48-year-old bank employee was fired for letting the mistake slip through while verifying the order.

The fired colleague took the case to court where the judge ruled he should get his job back, said reports.

Orchid Chemicals

NEW DELHI: The commerce ministry's nodal agency for foreign direct investment policy has sent a formal communication to thefinance ministry asking it not to clear FDIproposals in pharmaceutical sector after the Foreign Investment Promotion Board brushed aside its informal request at its last meeting. 

The department of industrial policy and promotion (DIPP) in a single-sentence letter to FIPB said that no FDI proposals be taken up for clearance as it was reviewing the FDI policy for the sector and all proposals cleared at the last meeting of the board be deferred, a person privy to the development told ET. 

The move threatens to bring foreign direct investment into the sector to a standstill that had only begun to see activity after Prime Minister Manmohan Singh himself endorsed policy changes to ensure that big acquisitions of domestic drug companies by multinationals did not deny cheap drugs to Indians. Four FDI proposals cleared in the last FIPB meet including those of Mylan Laboratories and Medreich face uncertain fate now as the DIPP review could throw up new issues. DIPP representative at the last FIPB meeting had objected to the proposals, but the board cleared them in absence of any formal request or valid reason for opposition. 

The move comes at a time when Singh and finance minister P Chidambaram have been touring the world, promising stable policy regime to attract investments into the country and check India's widening current account deficit pegged at 5% in 2012-13. 

The country had opened its pharmaceutical sector to 100% FDI via the automatic approval route in 2002, but last year the government had made a distinction between greenfield projects and brownfield ones following fears that Indians will be denied cheap medicines if multinational continued to buy big domestic companies. 

All brownfield investments in the existing Indian drug companies were put on the approval route—they have to be cleared by FIPB—and the government said conditions could be imposed on the foreign acquirer to ensure that the company continued to produce essential drugs. The current FDI policy states that the "government may incorporate appropriate conditions for FDI in brownfield cases, at the time of granting approval", giving FIPB powers to build these safeguards when it approves an investment proposal. Since these conditions apply to all brownfield investments even small investment in an existing firm have to meet the new norms. 

The DIPP had favoured allowing only 49% FDI in the sector earlier and seems to have some fresh concerns about allowing FDI in the sector. The department is yet to incorporate the conditions approved by the prime minister at a meeting in December last. 

Foreign direct investment in an existing pharmaceuticals company now requires FIPB approval. 

In 2008, Daiichi Sankyo of Japan had bought out the country's largest drug maker RanbaxyBSE 0.29 % for $4.6 billion. US-based Abbot Laboratories had acquired Piramal Health Care's domestic business for $3.7 billion. Another US firm Mylan bought Matrix Lab while Singapore's FreseniusBSE 0.08 % acquired Dabur Pharma. France's Sanofi Aventis bought Shanta Biotech and US-based Hospira bought Orchid ChemicalsBSE -0.92 %.

Gold :Gold: 3 Essential Facts For Your Future

 Clem Chambers :Advfn:112 June 2013

Best selling financial journalist provides three essential facts about gold.

When any market crashes, it’s a shock. For a real nose dive it normally takes something unexpected and dramatic to kick it off. If people had any idea of the reason or that it was coming then the fall would start early and be more shallow.

Gold is misunderstood and it is viewed as “the mad metal”, so here are three things to remember whether you love or hate gold.

1. Gold is a commodity

To many people gold is something special. It’s more than just another metal that comes out of the ground. This may well be because since the dawn of time gold has been a status symbol and status is what breeds success or simply just breeds.

Whatever you feel about gold, it is just a metal. That isn’t necessarily a bad thing and it doesn’t mean it needs to be cheaper.

Gold supply has not kept up with demand so its price should rise. Where once gold was used on things that could be easily recycled. Now gold is used in things that don’t get recycled in a way that the gold is being recovered. So gold is being lost.

2. Gold is volatile

Gold used to be worth a lot less than it is today. As we have seen recently at ADVFN, you don’t have to look hard to see gold is as vulnerable to swings in values as any other commodity.

The key to investing in gold is being able to watch the gold price live. A free ADVFN account will allow you to follow it live and direct at home or on your tablet or smartphone via our free app.

3. Gold is not a stable store of value

It is a myth to believe gold is a constant store of value. Like anything else the price of gold is created by supply and demand. When the Spanish pillaged South America and brought the gold and silver back to Europe, there was rampant inflation. More gold meant gold money was worth less and the price of things in gold went up.