The Federation of Indian Micro and Small and Medium Enterprises (FISME), an industry association for MSMEs, has cautioned its members to be cautious while dealing with Kotak Mahindra Bank. According to FISME, a Kotak connection is frequently associated with hidden expenses, higher loan rates, exorbitant forex commissions, overcharging for ordinary services, and poor service delivery.
“FISME as a body of MSME enterprises is duty-bound to take up issues that harm legitimate interests of MSMEs. Backed by professional advice it is going to take up the Bank related issues with all concerned authorities and also escalating these at the political level if forced to do so,” the industry body has said in its advisory.
The industry body told its members, “You are wiser if you have already experienced Kotak’s above short changings, but in case you are planning to switch over, please beware that you may be another victim of Kotak’s restrictive and unethical practices.”
It cited a “shocking” scenario in which a non-compliance fee of Rs 59 lakh was asked for a total exposure of Rs 3.50 crores by an MSME borrower merely to get out of Kotak.
“In some cases, foreclosure charges have been demanded even after the loan agreement had expired, or even when Kotak fully knew that such a practice will be in breach of the Banking Code,” FISME said.
