CCI finds no Section 4 violation in the Indian Bank Term Deposit Penalty case

A. Ram Babu Vs Indian Bank (Competition Commission of India)

Facts of the case:

1. Mr. A. Ram Babu filed a complaint under Section 19(1)(a) of the Competition Act, 2002, against Indian Bank (Opposite Party-1).
2. Allegation included violation of Section 4(2)(a) and Section 4(2)(b) of the Act.
3. Mr. Babu also involved the Reserve Bank of India (RBI) as Opposite Party-2, without any specific allegation against RBI.
4. Mr. Babu had two Fixed Deposit Accounts with Indian Bank, and he withdrew them due to higher interest rates offered by other banks.
5. Indian Bank imposed penalties of INR 27,951 and INR 22,500 on premature withdrawal of the two fixed deposit accounts.
6. Mr. Babu approached the bank ombudsman(an official who deals with the complaints made by the public against the government, or against organizations such as banks or insurance companies) but the complaint was closed without resolution.

Observations of the Commission:

1. Mr. Babu’s grievance centered around the penalties imposed by Indian Bank on premature withdrawal.
2. The Competition Commission noted that dominance in the market is crucial for examining allegations under Section 4 of the Act.
3. Relevant market definition: The Commission considered the term deposit as a distinct product and defined the relevant market as the “market for the provision of term deposit services in India.”
4. Geographic market: No regional distinctions were found in providing term deposit services within India.
5. Competition in the market: Various players, including public and private sector banks, post offices, and non-banking financial companies, operate in the market for term deposit services.
6. Lack of evidence of dominance: Mr. Babu did not provide evidence of Indian Bank’s dominance in the relevant market.

Conclusion:

1. The Commission found no contravention of Section 4 of the Act by Indian Bank.
2. Lack of dominance by Indian Bank in the relevant market led to the dismissal of the allegations.
3. The case was ordered to be closed under Section 26(2) of the Act.
4. No grounds for granting relief under Section 33 of the Act were established.

Outcome:

1. The Commission concluded that Indian Bank did not violate competition laws.
2. Mr. Babu’s request for relief was denied.
3. The Secretary was directed to communicate the decision to Mr. Babu.

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