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Stop banks from offering cashbacks on online purchases, CAIT demands in letter to Nirmala Sitharaman

FP Staff
·2 min read

Traders' body Confederation of All India Traders (CAIT) said in a letter to Finance Minister Nirmala Sitharaman that banks act in collusion with e-commerce companies to provide incentives to customers, which goes against the Reserve Bank of India's Fair Practices Code.

"In the present case, it has been noticed that several Banks including State Bank of India, Bank of Baroda, ICICI Bank,, Axis Bank, Citi Bank, HDFC Bank, Kotak Mahindra Bank, HSBC Bank, RBL Bank and others have entered into an unholy alliance with e-commerce companies prominently with Amazon and Walmart-owned Flipkart, forming a cartel and thereby granting 10 percent cash back and other incentives in lieu of making payments using respective bank cards while purchasing goods from online portals," wrote Praveen Khandelwal, National Secretary General, CAIT.

However, the letter said these banks don't provide the same benefit to shoppers who use online mode of payment while buying directly from traders. This, he wrote, is hindering with the smooth functioning of small scale shops thus breaching the 'right to trade' guaranteed in the constitution to every Indian in addition to being a violation of Competition Act, 2002.

The traders' body called for immediate action to stop the practice and a thorough probe into why banks were extending discounts only on purchase from designated e-commerce portals.

"Surprisingly, till date, no auditor or competent authority has ever questioned this discrepancy and neither the Reserve Bank of India has questioned such a brazen unethical irregularity of business by the banks," the letter stated.

CAIT had earlier written to Prime Minister Narendra Modi seeking an empowered regulatory authority to regulate and monitor the e-commerce business in India, claiming that "big e-commerce companies having deep pockets are leaving no stone unturned in monopolising the e-commerce business and retail trade of India with their malpractices and violating FDI policy of the government and relevant laws and rules".

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Read more on Business by Firstpost.