The Tribune, Chandigarh, India

Thursday, July 27, 2000,
Chandigarh, India

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Secrecy gets go-by in banks
From Raman Mohan

HISAR, July 26 — Snooping on others’ bank accounts is fast becoming a popular practice. While businessmen resort to it to upstage their rivals, others snoop on bank accounts for purposes as varied as finding the bank balance of the prospective father-in-law of their daughter, it is learnt.

It is easy. If you want to snoop on the financial-health records of your business rival and find out who he is dealing with, just walk into your bank and ask for your account statement. In all probability, you will end up with the bulky ledger itself on your hands for a night so you can get the relevant pages photocopied. Since you have the entire ledger all to yourself, you can also get photocopies of your rival’s account or for that matter anyone else’s whose accounts figure in the ledger. That’s the much-touted confidentiality of accounts for you, which banks are required to ensure by law.

A close watch on the day-to-day functioning of a dozen branches of different nationalised banks spread over several towns by The Tribune over the past week revealed that you need not even resort to this ruse. It was found that bankmen did not think twice before parting with ledgers or any other confidential information provided you are either a good customer or have a friendly banker in the branch concerned.

Several businessmen admit to snooping on their rivals’ accounts regularly by obtaining details of their financial dealings in this manner. They said they could identify potential customers from these details. Besides, access to such confidential financial dealings helped them prepare strategies to upstage their rivals. They said over the years, confidentiality had become alien to banks. “It’s only the gullible account holder who thinks his bank dealings are concealed from the prying eye,” commented a senior former bank officer-turned-car dealer.

Perhaps even worse is the free access to the account holders’ passbooks to every visitor to the bank. The passbooks are generally found stacked in plastic trays in most of the banks for anyone to carry one away at will. While businessmen are watchful and get their passbooks updated on daily or at best weekly basis, savings accounts holders just leave their passbooks in the bank and collect these only on their next visit. Until then the passbooks are open to inspection by whosoever is interested.

Inquiries reveal that by law banks are required to supply certified copies of statements of accounts to any account holder on demand. These were routinely supplied until a few years ago. However, as business grew, nationalised banks short of staff found it difficult to copy lengthy details by hand. Soon banks allowed employees of the business houses to copy the entries from the ledgers themselves within the bank’s premises.

However, these employees found photocopying an easier option and banks were too eager to hand over ledgers to them. The practice is so common now that ledgers are handed over as a matter of routine. It was found that ledgers often stayed outside the bank overnight. This practice has now degenerated into a means for extracting details of financial dealings illegally.

It was also found that most of the busy branches employed part-time accountants to update passbooks since the staff could not cope up with the work. That is why most savings bank account holders have to leave the passbooks at the bank for long periods. The manager of a local bank said they had to stack passbooks because the bank staff could not spare time to sort out a particular passbook and then hand it over to the bonafide account holders after identification.

With confidentiality taking a back seat, businessmen now routinely ask their bankers to inform them (unofficially, of course) whenever there is sufficient balance in the accounts of their debtors. Once they get this information, they promptly present cheques issued by the debtors in advance. This at times results in acute embarrassment to the account holder who may have issued another cheque to be honoured that day.

Ajay Goel (not his real name) runs a business here, which involves heavy credit. He often obtains cheques from his debtors and then leaves them with his bank manager to be encashed on priority whenever there is sufficient balance in the account of his debtor. He says he would have lost a lot of money if he had not cultivated friends in different banks. Lawyers say besides being unethical this practice violates the confidentiality provision in the banking law.

In many bigger towns there exists a nexus between bank employees and private finance companies. The bank employees supply these companies lists of their branch’s customers who have made fixed deposits or have large balance in their other accounts. The financiers then approach the account holders and seek deposits for their company with offers of higher interest.

Bank managers say they have to keep a watch on such employees because if their branches lose deposits, it is they who are answerable to the higher authorities and not the junior officials. However, at the same time many managers get similar information from property dealers about the persons who are likely to receive the proceeds from the sale of their property. The managers meet such persons before the sale is effected to obtain deposits. One of the managers said: “How can I refuse any confidential information to a property dealer who has helped me in this way? This is just one example.”

He said he is regularly approached for account information by fathers seeking to know bank balances of prospective fathers-in-law of their daughters or sons. “I part with the information on social considerations. But even if I deny it, he will get it anyway,” he added.

Another common malpractice is withholding of cheques issued by account holders and received for clearing. Such cheques are detained by banks for several days before the account holder arranges enough cash for the cheque to be cleared. This causes financial loss and inconvenience to the person to whom the cheque has been issued. At times, bankers do so to oblige good customers. However, unscrupulous employees often use this tactic for a consideration.

Big business houses nowadays also complain of missing notes in sealed currency bundles that are supposed to contain 100 notes of a particular denomination. Rajesh Atre (not his real name) who runs a factory at Kurukshetra says he has to deposit and withdraw large sums of cash everyday. Every few days, he says, he finds two to three currency notes less in the cash received from the bank. He has to make up for the missing cash since it is impractical to count all cash at the bank itself. “Likewise, banks accept our cash without counting and later in the evening they often report shortage of cash which I have to make up although I send cash for deposit after a careful check,” he said lamenting that there was no remedy. Bankers admit that this is a common occurrence. But they deny that their employees pinch the cash.