CCI Dismisses Allegations Against Canara Bank in Loan Practices Case

A complaint was filed with the Competition Commission of India (CCI) accusing Canara Bank of engaging in anti-competitive practices related to various loan transactions. The allegations were brought forward by Tamil Nadu-based KSD Zonne Energie LLP. The complainant accused the public sector bank of arbitrarily altering interest rates and levying retrospective charges. They also claimed that the bank colluded with property valuers to undervalue assets in loan recovery proceedings.

Specific Charges Made by the Complainant

According to the complaint, Canara Bank imposed unfavourable lending terms and hindered efforts to transfer the loan to other banks offering better interest rates. The complainant alleged that the bank deliberately delayed the release of collateral documents, which competing lenders required to process the loan transfer. This, they claimed, restricted their ability to secure better terms and suppressed competition.

CCI's Analysis and Findings

The CCI examined whether Canara Bank had violated sections 3 and 4 of the Competition Act, which deal with anti-competitive agreements and abuse of a dominant position. The regulator noted that while the complainant accused the bank of using its dominant position to increase interest rates arbitrarily, Canara Bank’s actual market share in the Indian banking sector was 5.73%.

Assessment of Market Dominance

The Commission clarified that a market share of 5.73% does not constitute dominance in the banking and loan services market, which includes multiple large financial institutions. Since dominance is a prerequisite for any charge under section 4, the absence of such a position meant the allegations could not be upheld.

No Evidence of Collusion

The complaint also included an accusation that Canara Bank had conspired with property valuers to deliberately undervalue assets for auction under the SARFAESI Act. However, the CCI found no supporting evidence to suggest collusion between the bank and valuers.

Conclusion 

Based on the available information, the CCI concluded that there was no prima facie case of contravention of the Competition Act. The allegations concerning abuse of dominance and anti-competitive agreements were therefore dismissed. The Commission found the conduct of Canara Bank did not violate the provisions of sections 3 or 4 of the Act.

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