Why do banks take so long to refund, yet debit the money instantly for a transaction?

[Lordkk]

I have read on quora that it's because banks what to keep the money with them as long as possible to earn interest. Is it true?

If debit is instant then credit should be instant too. For HDFC when I cancel a transaction I get a message that the transaction has been reversed but actual money come after few days.

Bank may say that its how tech works but It's hard to believe that they are telling 100% truth.

 

[techt]

Nazar se Tez Dimaag. Interpreted it on the fly like that.
I will slow down my dimaag for a while.

 

[techt]

And I've mostly read it as "Caka Ranbatra." 🤣

If you are hungry, you will read as Cakra(kakra snack) In a patra (bowl).

 

[SSV]

Wow, so they are earning from our money. Thanks for the podcast link.

Do you have any idea if they do it on purpose to generate extra income or it's just the way the system work?

Yes

It's called Float Income.

It has many repercussions.

Each day generates surplus income.

You have to keep in mind that this is excess income and in volumes, this generates a sizable surplus.

This is the reason banks do not lose on UPI, as they generate too much float income on the CASA even after loss of MDR.

This is very much correct…

This is whole reason why a lot of current fintech apps can survive in the market…
It’s completely on purpose.
That’s why rbi has a guideline to complete the refund within a stipulated timeline, after which we can claim penalty per day until the refund was made..

So most of these apps rely on this income by maximising the delay in refund but just before the stipulated max time ; I think it is somewhere between 7 and 10 days..

Imagine a scenario:

Where an average of 2k per customer for 10k userbase across India is pending for refund for various reasons for 4 years o 7 days..
I.e. interest income on 2 crores for the to 7 days..

The bigger the app, the bigger this kind of revenue, which is just a free money for them

 

[Vasuki]

And point being ?

Does not *

 

[techt]

Does not *

Exercise caution while posting. You can't misspell Polo for Dolo.

 

[its_karan]

Nazar se Tez Dimaag. Interpreted it on the fly like that.
I will slow down my dimaag for a while.

Its okay bro

I am just here to help and give back the community

Cheers!

 

[techt]

Its okay bro

I am just here to help and give back the community

Cheers!

LOL I haven't taken any offense and I never do. It has become a curse to me. If I write all text, people think I am offended. So, adding

 

[Vasuki]

wow ... excellent explanation.
You are CA Karan Batra. Till now I mistook your username for CANARA BANK and was wondering, I have seen fans of CCs but a fan of bank? That too Canara ? May be a Canara Bank employee.

Canara bank seriously 🤣🤣

 

[CosmicCat]

Its okay bro

I am just here to help and give back the community

Cheers!

Why did you change your username tho? Pehle wala username, "CANARABANK", hi sahi thha. 🤣

 

[its_karan]

Why did you change your username tho? Pehle wala username, "CANARABANK", hi sahi thha. 🤣