RBI panel on bank customer services describes several improvements that can improve banking processes
The much-awaited report on bank customer services by a Reserve Bank of India-appointed committee has made several proposals like simplifying account opening forms, lowering charges for services and using SMS and email to communicate with customers that could go a long way to help customers.
These are in addition to a host of major recommendations on home loan rates, facilities for senior citizens and pensioners, education loans and the involvement of bank boards to strengthen customer services.
Moneylife has consistently campaigned for improvement in banking services for customers and pushed hard for the timely publication of the report by the special committee which was headed by M Damodaran, former chairman of the Securities and Exchange Board of India.
The committee was set up over a year ago, and it submitted its report in the first week of July, only after the Karnataka High Court threatened to summon the RBI governor to explain the delay in the completion of the work.
Describing various initiatives, the report says banks should use SMS and e-mail to inform customers in case the account breaches the minimum balance and the charges applicable for not maintaining the balance. It says that penal charges should be in proportion to the shortfall of balance.
It has also proposed uniform account opening forms, as customers relocate often these days and the procedure followed by banks and the format for opening accounts differ from bank to bank causing inconvenience.
The committee has recommended increasing the ceiling of insurance cover on bank deposits from Rs1 lakh currently to Rs5 lakh.
On 'No Frills Accounts', the committee says the existing guidelines for opening these accounts require to be simplified to enable rapid fnancial inclusion.
About demand drafts, for which customers have to pay sizeable amounts even for a DD of small value, the committee recommended that banks should consider having a tear-away draft of definite denomination, or make electronic transfer of draft amount and issue a tear-away receipt which would reduce the time and cost for the user and the bank. "In the mean time, there could be pre-paid instruments of pre-determined value available to customers at a reasonable price."
The committee also recommended that receipt/acknowledgement should be provided on the cheque drop box along with the image of the cheque, as such facility offers convenience for banks (besides cost saving). The banks do not consider the advantages derived using the process whenever there is a dispute with the customer.
It also suggested that "the users (utilities, airlines, railways, etc) of electronic bank platforms for making collections may offer small discounts to their customers to favour electronic payments. This would result in substantial savings to them in cash management."
The committee has recommended that the Indian Banks' Association consider a toll-free Common Call Centre number (like Dial 100) for all banks. A customer would ring that number and thereafter get diverted to the bank concerned.
Addressing the growing complaints of customers relating to credit defaults, the committee said banks should be extra careful while reporting defaults. "Banks should be doubly careful while reporting a borrower as defaulter to the Credit Information Bureau. Banks should ensure that any representation from the customer in this matter is processed expeditiously."
The committee in its report stated that "exchange facilities for soiled/torn notes is a right of every citizen using such facilities and RBI, through its agents, should ensure that no holder of sovereign currency note is turned away at a bank counter when exchange facility is desired, irrespective of whether the person tendering the note is a customer or not."
The panel also recommended educating masses in the usage of technology in banking through the media and financial inclusion through branch expansions in the North-East.