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Read a document before signing on the dotted line

india Updated: May 18, 2013 23:22 IST

Whenever your banker asks you to sign a document, read it first. If you do not follow the legalese, ask for clarification. But don’t let your aversion to filling up a form or reading a lengthy document get the better of you and sign on the dotted line without reading the document. And remember, you have the right to a copy of every document that you sign.

This week I have before me, two examples of senior bank officials blatantly exploiting the trust reposed in them by their customers, misusing their funds and causing them immense financial loss and mental suffering: both make for distressing reading. Hopefully the first example, from an order of the apex consumer court, will help the other victim, a reader, in a more or less similar predicament.

The National Consumer Commission’s order of May 1, 2013, goes back to 1993-94 when Ram Kishan and his wife Kailasho Devi deposited their money in what they believed to be fixed deposits. However, their banker took advantage of their implicit faith in him and also their lack of understanding of the English language to get them to sign on forms that gave the bank permission to invest that money in stocks.

In fact when the couple asked the bank for FD certificates, the bank gave them passbooks and said the banking rules had changed. By the time the couple realised the fraud played on them, it was too late. And then began their struggle to get back their money- when all avenues of redressal (including the Banking Ombudsman) failed them, they approached the consumer court.

Two factors helped the couple here: (a) the forms on which they had signed were in English and the couple could not read or understand them - in fact they had signed in Hindi. (b) the officials who dealt with their account had been convicted in a criminal case for misappropriation of funds and forgery. So the bank was ordered to compensate the couple fully. In fact, the Commission imposed punitive damages on the bank (State Bank of Patiala Vs RamKishan , RP NO 4320 of 2012).

GS Arora: Three years ago, intending to invest R20 lakh in a government bond that gave me tax exemption on long term capital gains, I asked my bank to issue me a draft for the amount. The bank manager and a senior officer, well known to me, convinced me that I should invest instead in a ‘bond’ issued by the bank that gave me the same tax exemption and that the money would be transferred to my SB account after a three-year lock in period. So they got me to sign on a few forms, issue a cheque for R20 lakh and gave FD certificates that mentioned ‘Capital Gains Account Scheme’. Now I am told by the new manager that my money cannot be transferred to my SB account as it is invested in an account meant for people who would like to invest that money in a house. I have never had any such plans and the money was meant for my daughter’s marriage. What do I do now?

Answer: I would suggest that you first consult a chartered accountant to sort out the tax issue. Since the bankers’ action has deprived you of the tax exemption that you would have otherwise got on your capital gains, you must file a complaint before the consumer court, seeking compensation from the bank for the financial loss caused to you. I would also suggest that you check the track record of the officials.