How can we protect ourselves if we do not understand the rules?

"How borrowers are exploited by banks," is analysed by T Bandopadhyay. "An internal study-group of the Reserve Bank of India (RBI), chaired by Janak Raj, principal adviser, monetary policy department, has lambasted commercial banks for their non-transparency in fixing loan rates and graphically dissected how most Indian banks exploit borrowers." Banks are quick to lower the rate of interest on term deposits and for new borrowers but reluctant to lower rates for existing borrowers. The RBI sets a base rate and banks are supposed to add their spreads on that, based on borrowers' risk profile, in a transparent manner. But, "The most disturbing factor is the lack of transparency and 'arbitrariness' in the way the banks change the spreads." To a certain extent banks, especially public sector ones, are forced into cheating customers. Because, they are loaded with bad loans which are estimated to have crossed Rs 8 trillion, of which government banks hold over Rs 7 trillion. The total maybe even higher as the amount of restructured loans is unknown. Bank lending took off during the growth years of 2005-2009, but have turned sour since then. This is probably due to a combination of factors. Bank officials have little understanding of business models, politicians exert pressure on officials to favor friends and relatives and officials accept bribes for disbursing loans, which was described by the same author in "The murky world of suitcase banking". Private banks are even worse. They have a plethora of charges, much of them hidden in fine print and for which they do not inform customers. Indian banks are not the only ones cheating customers. International banks fixed Libor rates in 2008 to increase their profits, or to hedge against losses, when Lehman Brothers collapsed. Libor, or London Interbank Offered Rate, is the basis for $450 trillion of loans and derivatives, so banks would have made hundreds of billions from the scam. Total foreign currency transactions in the world amount to around $5 trillion everyday. Banks cheat customers on charges for conversion of one currency to another as well as on exchange rates. The RBI feels aggrieved that its rate cuts are not being transmitted to customers by banks. Bank officials resent being told what interest to charge on loans. They feel that the RBI should lay down the guidelines and let the market decide on what banks charge their customers. Trouble is that there is no system of punishing those who manipulate the system, like there is in the US. In the absence of any fear bank officials will continue to extort. The RBI should make rules simple and inform us. We can create the market.