Expressing its serious concern over granting of 10% cash back or discount by some of the premier Banks of the Country exclusively on purchase of goods from e-commerce portals of Amazon & Walmart owned Flipkart and painting the Banks as Villain for the business community , the Confederation of All India Traders (CAIT) today lodged a complaint with Union Finance Minister Smt. Nirmala Sitharaman levelling serious & grave charges on several Banks for entering into an unholy nexus with Amazon, Flipkart & other e-commerce companies, forming a cartel with them for indulging into Anti-competitive practices and offending Fair Practices Code of RBI for the Banks kill the small businesses of India. The CAIT has also charged the Banks for infringing the Fundamental Right to Trade and discrinination within the people of the Country which is prohibited under the Constitution of India.
The CAIT in its communication to Mrs. Sitharaman said that ” prevailing circumstances have prompted us to knock at your doors with a sense of confidence that you will be kind in taking immediate cognisance of this serious issue and will take immediate necessary steps to stop this practice and will order for a thorough probe about the source of extending such a huge level of discounts by the Banks only on purchase from designated e-commerce portals.” The CAIT has also sent similar communication to Union Commerce Minister Shri Piyush Goyal seeking his immediate intervention.
CAIT National President Mr. B.C.Bhartia & Secretary General Mr. Praveen Khandelwal in their complaint letter to Mrs. Sitharaman charged the Banks for grave violation of Article 19 & Article 301 of the Constitution of India and Fair Practices Code of RBI for Banks as also violating Section 3(1) read with Section 3(3) of the Competition Act, 2002 . They have prominently named State Bank of India, ICICI Bank, HDFC Bank, Axis Bank, Citi Bank, Kotak Mahindra Bank, Bank of Baroda, HSBC Bank, RBL Bank for creating a mass disruption in business activities conducted by small businesses in the Country and adopting a discriminatory approach towards traders and citizens of India. They said that these Banks are granting 10% cash back & other incentives on purchase of goods from e-commerce portals of Amazon & Flipkart by using their respective cards for making payments. Surprisingly, if the same product is purchased from an offline market even by using the card of the same bank, the respective Bank is not offering any Cash back or incentives. Such a collusion of the Banks with these Companies restrict the offline traders from conducting smooth business and therefore amounts to breach of Article 19 & Article 301 of the Constitution of India which guarantees Right To Trade to every citizen of India.
Both Mr. Bhartia & Mr. Khandelwal further cited Section 3 of the Competition Act,2002 which says that “No enterprise or association of enterprises or person or association of persons shall enter into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition within India. (2) Any agreement entered into in contravention of the provisions contained in subsection (1) shall be void”. The offers of 10% cash back by the Banks in the instant case is a violation of Section 3 and by default the Banks have colluded with e-commerce Companies for an Agreement to provide these discounts exclusively on purchases from e-commerce portals which poses an adverse effect on competition within India.
Both the trade leaders also cited the Reserve Bank of India”s Fair Practices Code for banking operations where the RBI has underlined that “each bank must have a well documented policy and a Fair Practices Code for credit card operations. The Banking Codes and Standards of India(BCSBI) has released a “Code of Bank’s Commitment to Customers”(Code) in July 2006 as also a Guidance Note in December 2006, which have been adopted by most of the banks with the approval of their Boards. They said that Fair Practices Code for Banks do not authorise them to conduct unfair business practices and therefore we have reason to believe that the Banks in collusion with e-commerce Companies are continuously conducting unfair business practices which are detrimental to the interests of crores of small businesses of the Country.
Mr. Bhartia & Mr. Khandelwal said that we are of the considered opinion that there is a gross violation of banking policies and the Banks which are often miser in giving even o.5% discount in interest rates to common man have become a charitable Institutions for big e-commerce companies in giving 10% cash back/discount and that too those business entities who are running their business in losses for past many years. Surprisingly, till date no Auditor or Competent Authority has ever questioned this discrepancy and neither the Reserve Bank of India has questioned such a brazen unethical irregularity of business by the Banks.