Banks under the scanner on client complaints

India's bank customers who often complain of shoddy treatment by the neighbourhood banks will soon get some succour. Although competition in the domestic banking space has seen customers being indulged with a host of services, the growing litany of complaints (by customers) and the practices adopted by banks in securing accounts and clients, have forced the RBI to take a tough stance. Based on the UK model, an independent Banking Codes & Standards Board of India is being set up to ensure a comprehensive code of conduct for the fair treatment of customers by banks. Policies to encourage banks that provide extensive services to all segments of the population while disincentivising those which are not responsive to the banking needs of the community, including the underprivileged, are also on the agenda. Many new private sector banks and foreign banks levy high services charges on customers. Even some state-owed banks have started levying charges for maintaining lower balances after recently adopting a centralised banking approach. Banks' charges for cheque dishonour range from Rs 100-500 per cheque, Rs 250-350 for lower minimum balance per quarter, Rs 600-1,000 per annum for monthly account statement. A certificate for account balance for previous years could set you back by Rs 250-500. According to the RBI, even with liberalisation and enhanced competition, consumer interest is not necessarily accorded full protection and grievances are not properly attended to. It has received several representations on the levy of unreasonably high service/user charges and enhancement of user charges without proper and prior intimation. In fact, the issue has figured in the Parliament also and the Centre had referred several complaints made by MPs to the RBI. Some of the complaints received by the RBI include charges for balance enquiry, cheque status verification, signature verification, address confirmation, photograph verification, punitive service charges for non-maintenance of minimum balance in savings accounts, transaction charges for reordering of cheque book and for cash transactions at the branch beyond a stipulated number, and pressurising customers to use ATMs including payment for cash transactions. Banks have their defence. Says a senior official with a private sector bank, Banks incur huge costs on technology, apart from services like ATMs, Internet banking, drop box facilities, etc. With interest rates coming down from previous highs, float incomes are not substantial enough. The costs incurred by the bank on courier charges itself exceed the revenue which the bank would make if a customer keeps an average balance of even Rs 5,000 a month. According to the RBI, in the UK, there is an institutional arrangement whereby a separate board has been set up to oversee the code drawn up by the banks' association. The Banking Code of the British Bankers' Association (BBA), which is a voluntary code, sets standards of good banking practices for financial institutions to follow when they are dealing with customers. The code applies to savings deposits and current accounts, card products and services, loans and overdrafts and payment services including foreign exchange. Says Bhaskar Ghose, MD & CEO, IndusInd Bank, Most of the banks who have higher service charges would wait for specific RBI guidelines in this regard. Given the large number of complaints pertaining to credit card issuers and the charges levied by them, the RBI has now decided to issue guidelines to banks to ensure transparency and disclosure of information by the card issuing banks and customer rights protection including facilitating enforcement of such rights. The scope of the Banking Ombudsman will now cover all individual cases/grievances relating to non-adherence to the fair practices code evolved by IBA and adopted by individual banks. The RBI also plans to monitor the nature, scope and cost of services to assess whether there is any denial, implicit or explicit, of basic banking services to the common person. Banks have been doing customer segmentation with the private sector and foreign banks concentrating on the middle class and the high net worth individuals. According to bankers, the RBI may now be trying to force banks to look at the lower segments of the economy too.

Banks under the scanner on client complaints

India's bank customers who often complain of shoddy treatment by the neighbourhood banks will soon get some succour.

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