Soon we will start mystery shopping'

In the dog-eat-dog world of retail banking, consumers have a fancy choice basket. That���s the good news. But the downside is that they often find themselves getting a raw deal from banks. This is where the Banking Codes and Standards Board of India come in. Intending to protect customers, the code is forcing all banks to set minimum standards of banking practices. Consumers can take banks to task if they fail to live up to their promises. But the code still has a long way to go. In an interview with ET, Kishori Udeshi, chairperson of BSCBI and former RBI deputy governor, shares her experience in dealing with banks.

Excerpts:

The code is in place, but just a week ago a few high-street banks have been fined for violating the ���do not call��� norms. Is your job proving to be more difficult than you thought?


No, on the contrary, I think it is being made easier. Now, the consumer courts are there, the ombudsman is there and the National Consumer Redressal Commission is taking an active interest. More importantly, the media is also playing a very useful role by highlighting the public grievances.


What kind of regulatory powers do you have over banks that fail to live up to their promises?

It is precisely because regulations did not work that BSCBI has been set up. What happens with regulations is that you issue them and expect that banks will follow. It is not possible to follow up on all the nitty-gritties. Therefore, individuals got sidelined even while regulations were always there. What we are trying is a different approach, a voluntary approach, a collaborative approach. We are telling them: ���you are running the risk of a bad image.���

Is moral suasion working?


It���s too early (to tell). Moral suasion is not something that will work immediately. It takes time, as it will have to seep through, which it will. If we can get the top management understand their responsibility on these issues, then the counter staff and all will follow. You see accountability has to come in somewhere. Today individuals are not fined, but institutions pay which is public money going out. Accountability should pinch the one who is not rendering the service. Banks will just pay the fine and get back to doing what they have been doing. That doesn���t help.

Sometimes, one gets the feeling that bank managements themselves are not aware of the need to change. In
home loan documents, for instance, borrowers are not informed that even their fixed rate loans are subject to
review, which is mentioned only in
the fine print?


Until and unless we come to know these small details we cannot take it up with the bank. We have given instructions that banks have to make important clauses which may be adverse to the consumer. We have started our field visits...soon we will do mystery shopping.

Despite the ���do not call��� list, banks are using the customer information for marketing?


We have made it very clear that we are not for implicit consent. Banks are saying that if someone does not want to be called they should write to them. But, why should you write to the bank? Banks must only get it in writing if they want to be called. Otherwise they must take it for granted that they cannot use that phone number. They are absolutely selling information. I have been shouting about it from the time I was a deputy governor. They are absolutely selling information. I know this for a fact that if you have a few lakhs in your account they send an insurance agent. If you complain, they would say, ���please bechara jaane do���. I sometimes feel that it is our culture. But, why bechara? The person has done something wrong?

The other side of the story is charges. There was some proposal to cap the charges. What���s your view?


I have mixed feeling on that. One should not interfere with banks��� commercial pricing matters. It is a question of competition. If you feel that they are charging high don���t go to such banks. You have a sea of banks to pick (from). Pricing-wise, I feel that banks should be given freedom to charge and competition will ensure that this will settle.

Which is the area where you have received maximum complaints?


Besides the ���do not call��� issue, we have received complaints on transparency of charges. I will give you a small example. There was this old woman who had put all her savings in a five-year fixed deposit. When she went after five years she found that the interest was less than what was promised. When she asked the bank, she was told that it was TDS. So then she said ���why didn���t you tell me��� because if the banker had told her and got the form filled by her the tax would not have been deducted because she is not a tax payer.
Bank staff are supposed to tell and get that form from her. But the staff did not tell her so she complained to the ombudsman. But ombudsman said that tax deduction is something we cannot intervene. My point is, if the bank has not told (her about the TDS), it must pay her. You either cut it from the staff pay or do whatever, but she should get her money.

In some investments, celebrity endorsement is banned. What���s your view on banking products? How will you measure a misleading advertisement?


There���s nothing wrong with celebrity endorsement, but it can���t be misleading. When the bank does not tell you a condition, which is vital, it���s misleading. Like you said about fixed rate home loans. Banks have to explain to customers what it means when interest rates change.

Banks often discourage customers from visiting branches. Things have become more impersonal...


I personally feel our banks should not ape the West where they do not have the people. We have a multitude of people...I know I am treading on dangerous ground here, but if you don���t want clerks it is for some other reasons. Otherwise you can engage people on contract, there are so many people who need jobs, provide them with employment opportunity. Take them on contract, and if they do not do a good job, fire them. But our banks want to be lean and mean. So you are getting the lean as well as the mean.

The code covers a fairly wide area. Are there any more things you are planning to include?
Once this gets stabilised, we will look at SMEs. That���s an area which is growing and needs attention. Small entrepreneurs do not get the kind of attention they really need from banks. Banks have so far been looking at only their retail or corporate. SMEs have been neglected...it���s a growth area that requires attention.
sangita.mehta@timesgroup.com