MSME association cautions members on Kotak Bank

• Mumbai: The Federation of Indian Micro and Small & Medium Enterprises (FISME), an association of small businesses, has issued an advisory to members, cautioning them on dealing with Kotak Mahindra Bank
• The federation said that it has received complaints from several members in respect of practices followed by the bank, particularly at the time of closing of their account
• “We have received 22 complaints against one bank
• So, there must be something in the way the business is conducted or the internal structure
• Whether it is foreclosure charges or non-compliance charges, these are shrouded in mystery and not very transparent and come up only when a customer wants to leave
• That is why we thought of issuing this advisory,” said FISME secretary-general Anil Bharadwaj
• He added that the idea is that members are forewarned before they have to face the burden of compliance charges
• The body has listed several complaints
• In one case, for a loan of Rs 3
• 5 crore, Rs 59 lakh was demanded as non-compliance charges
• It said that foreclosure charges ranged from 2% to 4% of sanctioned limits
• Securities were not released by the bank
• Another complaint was that promises to change loan terms were not fulfilled upon renewal
• “FISME letter, that you have shared over email, makes unfounded allegations against our bank
• FISME has concealed and misrepresented vital facts
• We vehemently deny each and every allegation
• Kotak Mahindra Bank never indulges in practices that are either against banking norms or are immoral or illegal
• The bank serves numerous MSME customers across India and has always endeavoured to provide high-quality service to its esteemed customers,” said Kotak Mahindra Bank spokesperson Rohit Rao
• Bharadwaj said, “We issued this advisory after writing to the CEO and each board member of the bank
• Since we did not receive any response, we decided to go ahead
• ” He added that if there were more complaints in response to the advisory, the association would decide its future course of action
• Bharadwaj added that complaints have come from members across northern states, including Rajasthan and Uttar Pradesh
• However, they have not received any written complaints from the southern states, but did get some calls
• He said that they have not received similar complaints against other lenders, which led them to believe that this was not something to do with a change in industry practice or regulations