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Role of Services Sector in Consumer Protection and Welfare

With Special Reference to Banking Sector

P. Buvaneswari*


Protection of the consumers is an issue of paramount consideration in the modern

economic world order. With globalization having permeated into all strata of the society, lending
a makeover to the concepts of trade and business, the face of consumerism too has undergone a
substantial change. It can be adduced without any hint of doubt that consumers are the real
driving force of the economy and thus the sustenance of the present economic order relies, to a
large extent, upon the adequate protection and welfare of the consumers. However, it has been
noted time and again that although consumer is portrayed as the cornerstone of a successful
economy, there have been oft repeated incidents of exploitation of the consumers, leading to a
constant urge of a panacea.

It is interesting to note that protection of the consumers has been a cause of concern
dating back to the Vedic ages. There were criminal offences prescribed for the cases of
adulteration of foodstuff, charging of excessive prices and selling of forbidden good etc. Later
Kautilya’s Arthashastra prescribed certain standards viz., a Director of Trade as a preventive
measure for cases of exploitation of the consumers ; sowing the seeds of consumer welfare and
awareness along with the objective of protection. Thus, one notes that protection of the interests
of the consumers isn’t a recent phenomenon and has been in existence since time immemorial.
With the passage of time, the concept of consumer protection attained new heights which led to a
codification of such welfare legislations, both at the domestic as well as international levels. 9th
April,1985 is a red letter day in the history of consumer protection movement as the United
Nations General Assembly adopted general guidelines on Consumer Protection (General
Assembly resolution 39/248) which were a representative of seven years of negotiations and
discussions among Governments worldwide, governmental agencies and the private players. The
highlighting feature of the guideline was the recognition of the fact that consumer protection
hinged on the promotion of just, equitable and a sustainable economic and social development.

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*Research Scholar, Department of Bank Management, Alagappa University, Karaikudi - 630004.
E-mail-id: Mobile No: +91-9884553427.
At the municipal level too, the issue of consumer protection has given significant
attention. The Constitution of India, since its very inception has recognised the significance of
securing to all the citizens an economic justice, thereby enshrining the same in the Preamble.
Further, Article 38 directs the State to secure a social order for the protection and welfare of the
citizens. Article 39(b) enjoins upon the state the duty to ensure that ownership and control of the
resources are distributed with the objective of attaining common good. In the post independence
era, a number of consumer welfare oriented legislations were enacted with an overall objective
of protecting the interests of the consumers in different spheres. For instance, the Industries
(Development and Regulation Act) 1951 was legislated with an objective to protect and regulate
the development of the Industries as well as the interests if the consumers as envisaged under the
Industrial Policy Resolution, 1948. The Monopolies and Restrictive Trade Practices Act, 1969
was enacted with the objective to ensure that the operation of an economic system did not result
in the concentration of economic power, detrimental to the common interests. However, the year
1986 will always be considered to be the Magna Carta of consumer movement in India as the
Consumer Protection Act,1986 (hereinafter the Act) was brought into force. This was the first
legislation of its kind in India which solely aimed at remedying the pitiable plight of the
consumers who were often victims of unfair trade practices and faulty services rendered to them.
The Act was to provide “for better protection of the interests of the consumers and to make
provisions for the establishment of consumer councils and other authorities for the settlement of
consumers’ disputes and for matter connected therewith”.

Consumer protection laws are designed to ensure fair competition and the free flow of
truthful information in the marketplace. The laws are designed to prevent businesses that engage
in fraud or specified unfair practices from gaining an advantage over competitors and may
provide additional protection for the weak and those unable to take care of themselves.
Consumer Protection laws are a form of government regulation which protects the interests of

Regulatory reform in the banking sector is facilitating greater competition, particularly in

light of the abolition of the last remaining Interest. Increased competition strengthens safety and
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soundness, but it can also bring disruption and anxiety to consumers. More attention needs to be
paid to the question of banking consumer protection.

Objectives of the Study

The study depicts the following objectives

1. To study the Consumer Protection in India.

2. To study the Consumer Protection and Banking Sector.

3. To study the Consumer Protection in USA

4. To study the Global Consumer Protection in Various Countries

5. To offer Suggestions.


Banking, Financial services, Retail banking, Technology in Banking, Risk mitigation,

Reserve Bank of India, Non-performing assets, Foreign direct investment, Public sector banks,
Private sector banks, Foreign banks, State Bank of India, ICICI Bank, Reforms, Consumer
protection, Banking Codes and Standards Board of India.

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