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While banking has come a long way since the 1970s when I joined the industry, many challenges remain. Let me highlight some of them related to customer service.
A regular feedback I have received is that the opening of a bank account is still a problem and marked with hurdles. Not every bank branch offers a no-frills banking account and not many staffers are aware or willing to open a simple account in accordance with the know your customer (KYC) norms as specified by the RBI. These accounts have a low transaction level, the balance does not exceed Rs 50,000 and the credit is not more that Rs 1 lakh a year. Maybe, in 2008-9, the Indian Banks’ Association (IBA) will get its members to use software to monitor these two conditions online. Then even a branch’s staff members can open such accounts without being inadvertently KYC non-compliant.
Similarly, how many banks can confidently say that all their branches provide cash exchange facilities and coins to walk-in customers? How many banks render this service at least at their currency chest branches? Unfortunately, our incognito visits reveal that such services are seldom offered to walk-in customers, and even for regular customers, it is rarely offered as a counter service.
A bank branch in any location should offer some basic banking services such as currency, remittances, basic forex (with the implementation of the Core Banking Solution, this should not be a problem) and shared ATM facilities. When we offer a licence to a branch, it is like providing public good in that area much like electricity or telephony, and the spirit of this licence must be respected.
In the area of customer service, the cherished principles are transparency, reasonableness, truth in selling and confidentiality, apart from an effective grievance redressal mechanism. However, one often comes across cases where these principles are not adhered to and the customer feels that he has been treated unfairly. For every person who files a complaint, there are probably 99 others who don’t. IBA, the Banking Codes and Standards Board of India and Banking Ombudsmen’s offices are the pillars of better customer service.
While focus on financial literacy can lead to informed and responsible consumers, it cannot by itself ensure consumer protection. There has to be a “responsible” selling of products, especially to vulnerable sections of society such as senior citizens and low-income groups. A bank-customer relationship is fiduciary and not based on transaction; it is a longstanding relationship and banks must act with responsibility. The approaches suggested to improve the interaction include providing affordable expert advice akin to pro bono legal services, transparency and simplified products, where benefits and costs are clearly understood, and aligning the seller’s incentive with consumers’ best interests.
Indeed, providing essential services and ensuring individual dignity for the millions in the country continue to be major challenges for banks.
Usha Thorat is Deputy Governor, RBI.
Excerpts from her speeches at the 61st annual general meeting of the IBA, and at the 8th Annual IEEF Retirement Policy Conclave
