Moneylife Events
No proper rules and technology hamper banking services, says RBI deputy governor

Dr KC Chakrabarty, while speaking at Moneylife Foundation’s first anniversary function, said that when the regulator becomes stringent, the framework will automatically provide protection for customers

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In India, one frequent complaint against banks is that they do not provide effective service. And this is because of the lack of proper laws and technology, says Dr KC Chakrabarty, deputy governor, Reserve Bank of India (RBI).

Speaking at the first anniversary function of Moneylife Foundation on Saturday, he said, "In a business organisation it becomes difficult to demand customer service because there are legal restraints in many matters. Unless the necessary legislations are in place, customers cannot avail of all the desired facilities."

Dr Chakrabarty gave the example of ATM and signature frauds, in which cases customers are expected to prove their innocence under existing rules. He said customers have to be made aware of the importance of following certain best practices in a technology-driven scenario and an attempt must be made to put the onus of proving the carelessness or compromise on the banks, rather than less savvy customers.

The RBI has commissioned a survey of customers using ATMs and based on the findings it is trying to bring in a legislation, which would place the onus on the bank to prevent fraudulent withdrawals, the deputy governor said.

He also talked about credit defaults where, in many cases, ignorant customers become defaulters and are penalised even during the inquiry. "For a bank you are a bad customer because you have failed to clear your dues, and as long as your innocence is not proved, you are deemed guilty. We cannot do anything about that. The only advice that I can give people is to talk to their banks honestly."

The RBI's deputy governor said there is a need for a self-regulatory forum which would address such issues. He said that when the regulator becomes stringent, the framework will automatically provide for customer protection.

"In order to improve customer service, the customer base has to be increased," Dr Chakrabarty said. "Banks should widen their reach, specially in the rural areas. And if they can successfully exploit opportunities and technological challenges then every citizen will have a bank account in the next five years."

However, he explained that a technological interface will not have the advantages of face-to-face interaction. Thus, financial statements, which could be simplified or customised to have more details, will be available only in a standardised format. "The very non-discriminatory nature of technology becomes a drawback at times," he said. He gave the example of the ATM machines, which, due to its limited storage capacity, could only accommodate certain denominations of notes in limited quantities.

Problems also arise because of the non-uniform nature of the software various banks are using, which makes certain options available to customers of some banks while leaving others out. This becomes very pronounced in case of core banking. "Unfortunately, the RBI does not have a mandate regarding softwares. When the RBI regulations were founded there were no computers, so these digital norms were not included. But we have to think along these lines, no doubt," Dr Chakrabarty said.

(Also read: Dr KC Chakrabarty says customers should demand better service from banks)



Sharad Phadke

5 years ago

Does the Dy. Governor of RBI knows that not a single bank has been Audited under Section 6 of Payment Settlement Act ? (P&SS ACT)
Other wise all ATM related issues would not have been on cold storage and private banks enjoying "free" money for any number of days.
RBI has done many good things but has not followed them and left it on Banks to act as they wish.


6 years ago

The comments of Dr.C.K Chakrabarty, whom I know well from PNB, are laudable & yet toothless. The State bank of India has the worst soft ware for Mini Statements, Pass-Book postings, TDS, & Cheque payment and then it is the overweight child, pampered by both RBI & now the GoI M/F

Sensex, Nifty not out of the woods as yet: Monday Closing Report

Even if there is a rally, it would be a slow and weak one

The market opened with decent gains as investors went bargain-hunting, picking up stocks at lower levels after the decline seen last week. The uptick was also supported by the Asian peers, which were mostly higher in early trade, most of which opened after the Lunar New Year holiday last week. Choppiness resulted in the indices touching their previous close a couple of times, but positive momentum continued with the market trading range-bound. However, the broader markets wilted under selling pressure, trading in the red. Institutional investors seem to be looking at other markets as India is no longer as attractive as it has been last year.

The market touched an intraday high in post-noon trade after which selling pressure became intense, pushing the key benchmarks into negative terrain. However, the indices were able to pull themselves out of the red, only to finish flat.

The Sensex and the Nifty both opened with a positive gap at 18,135 (127 points up) and 5,430 (34 points up) respectively. For the major part of the day, both the indices traded above Friday's closing. In the last two hours of the trading session, the indices hit their intraday highs, but soon slipped to touch the day's low. They did not fall below Friday's low.

Although the market ended positive, it closed well below the day's opening. The Sensex ended 29 points up at 18,037 while the Nifty ended 0.25 points up at 5,396. The advance-decline on the National Stock Exchange was a poor 587:1,141. The market is not out of the woods yet. The Nifty has to cross 5,550 before we can look forward to some sort of rally.

The market breadth on the Sensex and Nifty was in favour of the gainers. The Sensex had 21 advancing stocks and nine stocks in the declining list, while the Nifty closed with 29 stocks in the green and 21 in the red. The broader indices underperformed the Sensex with the BSE Mid-cap index declining 0.52% and the BSE Small-cap index falling 0.83%.

The sectoral gainers were led by BSE Realty (up 1.67%), BSE Fast Moving Consumer Goods (up 1.42%) and BSE IT (up 0.18%). The top losers were BSE Healthcare (down 1.50%), BSE Consumer Durables (down 1.32%) and BSE Capital Goods (down 1.11%).

The top Sensex gainers were Hero Honda (up 2.75%), ITC (up 2.62%), DLF (up 2.32%), Jaiprakash Associates (up 2.27%) and NTPC (up 1.47%).

Cipla (down 2.95%), HDFC (down 2.07%), Wipro (down 2.05%), Hindalco Industries (down 1.96%) and Larsen & Toubro (down 1.89%) ended at the bottom of the list.

The government on Monday estimated economic growth for the current financial year at 8.6%, as against 8% a year ago. The Central Statistical Organisation's (CSO) gross domestic product growth projection is higher than the forecasts made by the country's central bank-Reserve Bank of India-and India's finance ministry earlier.

The latest GDP growth estimate of 8.6% for the entire fiscal means that the pace of economic expansion slowed in the second half of FY2010-11, given that GDP growth in the April-September 2010 period stood at 8.9%.

Markets in Asia closed mixed as economic optimism in the US lifted investor sentiment, while worries that the authorities in China will consider additional curbs to rein in prices after the Lunar New Year holiday, kept investors guarded.

The KLSE Composite rose 0.25%, the Nikkei 225 gained 0.46% and the Seoul Composite advanced 0.47%. On the other hand, the Hang Seng tanked 1.49%, the Jakarta Composite declined 0.24% and the Straits Times fell 0.59%. The Chinese and Taiwanese markets remained closed today.

Back home, institutional investors were net buyers in the equities segment on Friday. While foreign institutional investors pumped in funds worth Rs144.04 crore, domestic institutional investors bought stocks worth Rs237.45 crore.

State-run power equipment-maker BHEL (up 0.51%) today said it has signed an agreement with Spain's Abengoa to set up solar power projects in India. The agreement will enable both organisations to leverage their capabilities in offering EPC solutions for solar power projects in India, as well as give them the opportunity to explore cooperation on energy projects in other parts of the world.

The agreement is significant in the context of the Jawaharlal Nehru National Solar Mission launched by the government, which aims at the establishment of 20,000MW of solar power generation capacity by 2022.

Tecpro System (down 2.01%), a key player in the power sector, has entered into an exclusive collaboration agreement with Nanjing Triumph Environment and Energy Company, China (NTK) for waste heat power (WHR) projects in the Indian markets.

NTK is a leader of WHR projects in China, having executed more than 120 such projects. The company will provide turnkey EPC solutions in WHR projects to the Indian cement industry along with NTK as the technical associates.

Accentia Technologies (up 0.79%), a leading global end-to-end business process management and consulting company offering managed services in Healthcare Receivables Cycle Management (HRCM), has bagged an order worth Rs25 crore for providing high-level consulting and education solutions for a large, diversified educational trust in south India with over 100 well established institutions and having over 35,000 students over the next three years.

The scope of work comprises financial restructuring, value unlocking, operations and management contract, market positioning, brand management, academic restructuring and effective interventions and devising a dynamic student mobilisation strategy for the group.


Dr KC Chakrabarty says customers should demand better service from banks

Speaking at Moneylife Foundation’s first anniversary function in Mumbai, the RBI deputy governor said banks are bound to give proper service to customers and people must demand this. People should not patronise banks that do not do things right, no matter how big they might be, he said

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Got a problem with your bank? Just go ahead and demand better service, says Dr KC Chakraborty, deputy governor, Reserve Bank of India (RBI). "Banks cannot deny customers service. If they make excuses, the customers should put their foot down and demand their due," he said, while speaking at the first anniversary function of Moneylife Foundation in Mumbai on Saturday.

Dr Chakrabarty said that it was up to the customer to be more vigilant and demand their rights. "Instead of running to the regulator every time something goes wrong, the customer should approach the bank directly. A bank is bound to give him service, and people have to demand it from them. Do not patronise those banks who do not do things right, no matter how big the bank might be. In case things really do not work out, change your bank", the deputy governor of the RBI said.

He criticised banks that refused to allow a customer to open an account citing the Know Your Customer (KYC) protocol. He said KYC was a set of guidelines and should not come in the way of giving services. The issue is pertinent with regard to many banks refusing to accept ration cards as identity proof. Dr Chakrabarty agreed that it was a pressing problem, especially for rural customers. However, with the market being flooded with bogus ration cards, many institutions have stopped accepting this as a precaution. He said, "Banks cannot refuse a customer who wants to open a new account. If they cannot accept ration cards as one of the proofs, then they should suggest and accept alternatives which are valid."

A packed audience at the Welingkar Institute of Management Development & Research listened attentively to the animated address by the RBI deputy governor.

Dr Chakraborty also spoke about signature forgery and ATM frauds. According to the existing process, in case a customer complains that money has been withdrawn from his account without his consent and through fraudulent means, it is up to him to prove this charge. "It should be the other way round", he said. "It should be up to the bank to clarify that the money is not drawn fraudulently."

The RBI has asked all banks to reimburse customers the amounts that may be wrongfully debited on account of failed ATM transactions, within a maximum period of 12 days from the date of receipt of the customer's complaint. Failure to re-credit the customer account within the stipulated period would result in the bank having to pay Rs100 a day to the aggrieved customer, the deputy governor said.

But the onus is on the customer as well, to understand the limitations. Customer service is a critical but often misunderstood area, he said. "Unfortunately, in India, the customer expects world class service with zero payment," he remarked. While the bank must be empathetic to the customer, the move should be reciprocal. "It is the duty of society at large to sensitise citizens to each others situation, so there is effective service delivery," Dr Chakrabarty said.

(Also read: No proper rules and technology hamper banking services, says RBI deputy governor)



Shadi Katyal

6 years ago

Since talking of customer service why does the banks not modernity the banking system. Granted we have too many employees and less productivity, why do we have to stand in line to present the cheque and take a token and stand again in line for collection?
Why cant the same emporium give cash when presented with cheque???
Such a simple method but I presume unions will even object that.
Russia imploded of such practices but we still have hold of unions.


6 years ago

Mr. Chakravarty, I have a account with Goreagaon(east) Branch of Bank Of Maharashtra. To get my passbook updated sometimes it takes me 45 minutes because the line for cash withdrawal/deposit/passbook entry is same. Number of times i have taken up the complaint with branch manage/their corporate office also. no one listen. What am i supposed to do please explain.
its nice to talk from ivory tower

Shadi Katyal

6 years ago

Does Dr.chakrabarty not aware that almost all the PSU banks are nonfunctional compare to few private banks. How can one make such statement while either living in void or fully aware that the banks work on union rules and let the public be demand as they get paid and there is no way anyone can be fired.
It is a pity that such speeches and advised are given knowing well that Qualtiy of any service is non existance

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