I noticed the Change.org petition initiated by a group of citizens to stop banks from fleecing the customers in the name of increased charges. The petition is addressed to the RBI Governor and the Minister of Finance.
Of course, you and I are not happy in the way banks go about secretly levying charges on us by signing us up for services that we don’t want or have not asked for.
They expect us to maintain minimum account balances even in savings account and by chance, when we fail at times, they promptly slap the penalty. There is no communication, not even an email or SMS, warning us in advance about the same.
But when an EMI becomes overdue, you find collection agents issuing threats and the very next, standing at your door.
There is no escape, the barbarians are at the gates.
If you are one of those who visit a bank branch, you know what it takes. It takes ‘away’ a lot.
As soon as the ‘relationship manager‘ gets a whiff of your bank balance or the fresh cheque in your hand, you are offered a cabin to sit in, tea/coffee, cold drinks and then the brochure comes out – a brand new investment product that is safe and give good returns. This is the way to push an endowment policy down your throat. It is a product that makes all the money for the banker, none for you. You lose!
As a customer of banking, you are always losing to the high handedness of the bank. I loathe this attitude. I have expressed this many times in writing and to their staff as well. But nothing seems to change. I continue to suffer them.
This is one side of the money.
Let’s see the other side now.
Look at this chart below. I picked it up from Twitter where it has been floating. I thank the person who compiled or shared it first.
Which sector is getting the lion’s share of mutual fund investments?
No guesses required. It is Banking. With 20% allocation, it is an outsized concentration. In fact, the second highest allocation to software is at a distant 8%.
Now, what makes mutual fund managers so optimistic about banking?
Well, well. No guesses again.
The banks have access to the biggest representation of our economic power – our money. And they can use this power in any way they want, to extract all the fees and charges that they deem fit, thus deliver outsized returns for their investors.
Now, I am an investor in mutual funds too. And I advice my clients to invest in mutual funds, which have investments in banking.
When I see the money generating capacity of the banks and the returns rolling from the investments I make, I feel good. My clients feel good too that I recommended such funds, which create more returns and help them reach their goals, faster. (Of course, I have no control over the returns.)
And there in lies my dilemma – the customer loses vs the investor wins.
I want something as a customer (lower fees, charges and better services) and another thing as an investor (higher returns).
It’s money vs money.
What do you say?