India's biggest private sector banks have nothing but contempt for their customers. They've made this absolutely clear by the way they have reacted to the enormous amount of public criticism they have received for the new fines (or service charge or whatever they call it) on cash transactions, as well as for the myriad other charges that banks keep deducting from their customers' money.

As far as anyone from any bank has answered the criticism, it is merely to point out that the fines, charges and deductions are in keeping with the regulations. However, that's hardly an answer because the whole point that angry customers are making is that the regulations are inadequate and unfair. Our banking regulator, the Reserve Bank of India has failed to protect customers from the rapacious ways of the banks.

There are a lot of attempts to obfuscate what this entire matter in a fog of claims about regulations and good service and bad service and what not. However, there are two fundamental points that all of us who are customers of these banks need to keep a public focus on.

One: Why is it that banks, unlike any other business, are allowed to unilaterally take away your money? As I wrote earlier, when any other business needs you to pay for anything, they have to ask for the money and wait till you actually hand it over. If you go to a shop, and the shopkeeper feels that you are spending too much time there and he's incurring extra cost, he cannot reach into your pocket and pull out some cash. That would be a crime. But banks can do the equivalent. Why is this the case?

What we need is a fundamental change to banking laws so that whenever a bank has to charge you for a service, they should send you bill and you make a payment against that bill. They should not be allowed to just take your money, just like other businesses are not allowed to do so. Of course, the banks and their so-called regulator will come up with a million reasons as to why banks must continue to be allowed to dip into your pocket whenever they feel the need. However, I think this is just the kind of issue that is appropriate for Public Interest Litigation (PIL). Let's look at the second issue now.

Two: Why is the regulator not bothered about the details of how these fines and charges are calculated. When a bank charges Rs 150 for cash withdrawal, does it actually cost that much? Or a pro-rata charge of Rs X per thousand? Does the cost escalate linearly with the amount of transaction? Or consider the ridiculous charge that one bank has imposed on some transactions at any branch other than the 'home branch'. Does it actually cost extra to use a networked computer system at a different branch from the customers' own? Is this bank going back to the days of branch banking?

Now, we should not be asking these questions from these banks. They will spin something in polite PR language but basically ask us to buzz off because they are following regulations. It's the RBI that needs to answer the questions. How close a tab does it keep on what the banks are charging, individually and in aggregate. Does it even collect the data? Can we have a list of what percentage of each bank's income comes from such fines and charges? Has the RBI studied whether fines and charges are managed in such a way as to create non-compliance and thus be a source of revenue? The answers are obvious. However, it's also obvious that the RBI won't actually give these answers to customers. In fact, this is exactly the kind of situation that the Right to Information law is meant for.

The RBI is always in the news for monetary policy or licensing or its leadership. That mostly obscures the fact that its track record in consumer protection is terrible. It's time for bank customers to step up, get organised and start forcing some changes.