The Competition Commission of India (CCI) on Wednesday dismissed a complaint filed against Jammu and Kashmir Bank for allegedly abusing its dominant position by entering into anti-competitive agreements with various entities. The CCI order said that there is no prima facie case being made out against the bank since entering into agreements is a common feature in the ordinary course of business for banks.
Earlier, CCI had received a complaint against J&K Bank for entering into agreements that are in violation of the Competition Act. For example, the complainant said that agreements with J&K government, University of Jammu, University of Kashmir and J&K Police forced employees working in these institutions to have a bank account in J&K Bank to receive salary that restricted their freedom of choice and resulted in reduced competition in the market.
Additionally, agreements with two-wheelers and four-wheelers players such as Royal Enfield, Piaggio Vehicles, Maruti Suzuki and Tata Motors, who designated J&K Bank as their preferred financier, constrained the consumer to obtain a loan exclusively from the bank.
The complainant also pointed out that J&K Bank is a dominant player in J&K, particularly in the Kashmir province, and imposes unfair conditions on its customers by tying its services.
“To avail a locker facility, the bank requires a consumer to purchase fixed deposit of Rs 15,000 for a period of ten years apart from the payment of annual rent. However, as per RBI guidelines, a bank may obtain fixed deposit which would cover 3 years rent and the charges for breaking open the locker in case of an eventuality,” the complaint said.
The CCI, on the other hand, said that institutions ordinarily enter into agreements with banks of their choice through mutually-agreed terms and conditions. In the present case, the primary purpose of the agreement between J&K Bank and the state government was to give personalised and customised banking services to the permanent employees of the state government.
“It appears that there is no prohibition for any entity and the banking institution from approaching each other for such kind of arrangements,” the order said.