Fruitless request


  • Business
  • Saturday, 25 Apr 2009

I ENJOYED P. Gunasegaram’s article (“The Real Cost of Credit Cards”, StarBizWeek, March 7) on how banks are benefiting by charging exorbitant fees on credit-card charges.

These days, we see bank employees being rewarded primarily based on how much profit and business they can bring in. This is especially so with consumer banking.

There are always sales people at shopping malls, offering freebies just to get you to sign up for a credit card. It will not be long before our younger generation is saddled with so much debt that they will be bankrupt before they are 30.

In addition to hidden fees, banks make handsome profits by not crediting your account on the day (before 4pm) that you bank in your cheque.

I am aghast that if I bank in funds into my credit-card account (via cheque payment), my bank will only credit the amount when the cheque is cleared. Hence, even if I were to bank in my cheque, say, on Friday (April 17), the payment into my account is only considered as a credit on Monday (April 20).

Meanwhile, my bank had already debited my account on April 17, and I would lose three days’ interest, if I was on overdraft. I would’ve also lost three days’ interest to my bank.

From the limited knowledge that I have of the bank clearing system with Bank Negara, is it not true that the moment a cheque is presented to my bank, the bank’s account with Bank Negara is credited immediately, regardless of whether the cheque is good for payment or not?

In addition, if my bank’s account with Bank Negara is positive at the end of the day as a result of the cheques banked in, does my bank not gain through overnight interest for the three days?

May I remind Bank Negara that in our rush to ape the Western financial institutions, which charge fees for almost everything, Malaysia’s banking institutions have not reached the standard of service that justifies the fees, especially when the base lending rate has a margin of more than 3% from the current overnight policy rate of 2%.

Does it make sense that banks are already making extraordinary profits and they still charge commissions for simple things like receiving a telegraphic transfer from overseas into a client’s account?

In developed countries like Australia and New Zealand, the margin between the lending and deposit rates are extremely fine, and consumers understand the rationale for such service charges. This is certainly not the case in Malaysia.

Also, why should consumers pay an RM8 annual fee to use an ATM card when the banks’ aim for having ATMs is to garner more business and profits by reducing overheads (fewer counter staff) and infrastructure for banking counters?

It is a fruitless request by your Gunasegaram to expect Bank Negara and the Association of Banks in Malaysia to look into exorbitant charges, as it had all but fallen on deaf ears. Why rock the boat when the going is good?

From: Against unjustifiable rent seekers, namely banks, Kuala Lumpur

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