The Confederation of All India Traders (CAIT) on Thursday in a communication sent to Union Finance Minister Nirmala Sitharaman levelled serious charges against various Banks for colluding with several foreign funded e-commerce companies including Amazon & Flipkart for making an unholy cartel by helping them in creating an uneven level playing field by providing cash back on usage of credit & debit cards of their respective Banks on purchase of goods from e-commerce portals whereas this facility is not available to consumers who purchase goods from the offline market even using the same cards.
The CAIT termed it as an unfair practice of banks causing grave banking irregularities and gross violation of Right to equality, FDI Policy and the Competition Act. The CAIT has demanded an immediate time bound investigation of this most critical matter which is ruining the offline trade of the Country.
CAIT National President B.C.Bhartia & Secretary General Praveen Khandelwal while calling it a major lapse on the part of the Banks involved in this sinister game of collusion with e-commerce giants like Amazon & Flipkart are State Bank of India, HDFC Bank, ICICI Bank, Citi Bank, Kotak Mahindra Bank, HSBC, Bank of Baroda, RBL Bank, Axis Bank etc. The trade leaders said that such unfair practice gives a shopping advantage to people for purchasing goods exclusively from e-commerce portals but not to people who shop from offline shops. Thus, creating an inequality scenario between online and offline markets of the Country. How can the Banks do such a discrimination-questioned the trade leaders.
Bhartia and Khandelwal said that it is most surprising that these Banks which claims that they earn almost 1 or 1.5% from the payment transactions are able to provide 10% cash backs and other benefits to the consumers. It is a matter of investigation whether the Banks are providing cash backs from their funds or they are funded by someone to provide these cash backs and other benefits.
The question is whether under the banking rules, the Banks are empowered to provide such a cash back from their own fund which is a proposition of loss or whether the Banks are entitled to receive funds from an outsider to make up the loss caused by giving such hefty cash back and creating an uneven level playing field in the Country?
The CAIT has sent similar memorandums to Union Commerce Minister Piyush Goyal, Bhagwat Karad, MOS Finance, Shaktikana Das, Governor, Reserve Bank of India, Ashok Gupta, Chairman, Competition Commission of India, Rohit Singh, Secretary, Consumer Affairs, Anurag Jain, Secretary, DPIIT, Secretary, Revenue and Banking etc. The CAIT has categorically said that if no action is taken by the Govt, the CAIT will have no other alternative but to approach the Court of law for seeking justice.
Bhartia and Khandelwal said that such act of the Banks clearly discriminates between two sets of traders thus violating the Preamble of the Constitution of India which guarantees “Equality” and restricts the consumers to purchase goods from offline shops which also violates Article 19 and Article 301 of the Constitution of India which guarantees Freedom of Trade and Commerce in the Country. Prima facie, it looks like a gross irregularity in the banking system of the Country which needs your immediate attention-said the trade leaders.
Bhartia & Khandelwal said that providing cashback exclusively to online shoppers through portal of e-commerce companies like Amazon, Flipkart and others,assumes the status of a cartel which leads to providing help to Amazon, Flipkart & others for indulging into mal-practices of maintaining predatory pricing, exclusivity and creation of an uneven level playing field in the market which is specifically restricted under Press Note No.2 of the FDI policy.It is a cartel between Amazon & Flipkart with Banks which also encourages unfair competition in the market which is prohibited under Section 3(1) read with Section 3 (3) and Section 2 of the Competition Act among other things prohibits agreements which cause or are likely to cause an appreciable adverse effect on competition in India.
