Editorial: Banking on Ignorance

The Rhenock episode involving strong allegations levelled by an army ex-serviceman of having being stung by a hoax which preyed on his ignorance about banking procedures and pension details should not be dismissed as an isolated incident. [read NOW! issue dated 08 August 2012 for detailed report].
The former Indian Army Naik’s account of how he was confused with lies, and even threats of legal hassles, into believing that pension dues deposited into his account and reflected in his passbook were clerical mistakes and not his own money, amply illustrates that the pretence of authority can be easily deployed to cheat. The Branch Manager is dodging accountability on the grounds that the business correspondent was not an employee of the bank and that his deals with the affected party neither carried the bank’s sanction nor could be used to fix any accountability on the bank. This is another example of authorities getting away with weak excuses which end up working because the people at large are generally ignorant about such matters. The Reserve Bank of India’s guidelines on the hiring of Business Correspondents/ Facilitators is quite clear when it directs that “all agreements/ contracts with the customer shall clearly specify that the bank is responsible to the customer for acts of omission and commission of the BC [Business Correspondent].” The spirit of this directive suggests that instead of making the complainant run around in circles, the bank management, upon learning of how Rs. 2.6 lakh had been skimmed from the ex-serviceman’s bank account, should have been the agency which undertook an internal enquiry apart from lodging a police complaint. In the present case, the bank did not even think it necessary to inform the pensioner of the Rs. 4.5 lakh deposited into his account by the Indian Army. This information, had it been relayed to the victim [as must surely be the prescribed procedure], was shared by the bank two months late, that too after the victim had suspected foul play and was approaching the Rajya Sainik Board for information. Had the pensioner been informed in time of this transfer into his account, he would have never fallen for the scam.
The latest in this case is that the accused has agreed to reimburse the stolen money. While this must come as a relief for the pensioner, the case should not be closed just yet. The police have registered a case and taken the accused into custody, but there are other agencies which need to take up the matter as well; the higher authorities of the bank itself and the RBI, which now has an office in Sikkim, for example. The present case made it to the headlines, but there is every possibility that there are more bank accounts which have been similarly skimmed and the victims have either not realised it yet or have chosen not to complain. It is expected of the higher authorities of the bank and the RBI to investigate the banking practices at Central Bank of India’s Rhenock branch to check whether or not this was an isolated aberration and place better monitoring systems and issue fresh guidelines to ensure that people new to the banking system are not conned again.