Madras High Court rules SBI cannot misinterpret RBI circulars

Madras High Court rules SBI cannot misinterpret RBI circulars

Collection of cash handling charges from stamp vendors based on assumptions is illegal

The Madras High Court has held that the State Bank of India (SBI) cannot misinterpret the Reserve Bank of India's (RBI) circulars and the collection of cash handling charges from stamp vendors based on its assumptions, is illegal.

The single bench of Justice S.M. Subramaniam noted that the Director/ Commissioner of Treasuries and Accounts had long back clarified that the collection of cash handling charges was not permissible.

On verification of the master circulars issued by RBI and relied on by SBI, regarding the agency commission, there was no specific direction or instruction from RBI. Thus, it was not correct on the part of SBI to collect cash handling charges from the stamp vendors. Also, the respondents failed to establish they had the authority to do so.

The petitioner, P.S. Shanmuga Sundaram has been vending stamp papers since 1988 and holds valid licenses for the same. The grievance of the petitioner was that since 2015, the respondent, SBI, had been illegally demanding that he deposit Rs.15 for every bundle of currency, i.e., a bundle containing 100 notes, by remitting in the name of the account as "Commission Account," for which no receipts or payment challans were issued.

Thus, the petitioner was forced to pay Rs.150 to Rs.200 as cash handling charges that had a severe financial impact on the meager commission earned every day.

The respondent, the Director of Treasuries and Accounts Department, Chennai, had addressed the general manager of SBI to waive off the cash handling charges collected from the stamp vendors, as the government was paying separately to the banks.