Are privileged bank customers getting more benefits?

The benefits of privilege banking remain a mere eye-wash, as privileged banking services are hardly availed, as they matter little to privileged banking customers

The new private banks (or private banking) are seen to accord the special privileged/preferred/Imperia customers status to their few in number super rich/high or ultra-high networth individual customers. Privileged banking is essentially based on the volume and size of their balances in savings bank accounts and extent of the amounts placed in term deposits e.g. Axis Bank requires minimum Rs1 lakh in savings bank or ICICI Bank for salary accounts with a monthly credit of Rs50,000 or more or a home loan between Rs40 lakh – Rs1 crore.

A series of benefits of private banking or privileged banking are being given to a select few rich and at the same time simply denying them even in a lesser degree to the lakhs of aam janata.  Small time savings bank (SB) and fixed deposit (FD) customers who have chosen to voluntarily safe keep their hard-earned savings essentially in any bank nearer to home. This is done for the ease of drawing upon them on demand in case of dire need or emergency without any elaborate paper work and delays.

Most of the so-called extra/special benefits that are sought to be extended by private banks to this handful lot of super-rich so-called ‘privileged customers’, who hardly ever seen to set foot into private bank branch portals, more often than not they are seen to leave bank visits to the secretary or chauffer. Consequently, the benefits remain a mere eye-wash, as they are seen to be hardly availed of by many as they matter little to them.

What are these private banking benefits?

  • Priority in allotment of safe deposit lockers and in the choice of the size
  • Lower locker rentals
  • Some banks are said to be offering round-the-clock locker facilities with air conditioned  mirrored changing room at tony down town areas of Mumbai like Cuffe Parade, Malabar Hill and Bandra-Kurla Complex (BKC)
  • Reduced charges and enhanced limits on credit and debit cards
  • Forex, internet banking and ATM withdrawals and bill payments
  • Bank travel and gift cards
  • Accounts and differently coloured cheque leaves prominently displaying “Privilege Customer” tag that becomes status symbols
  • They have less waiting during branch visits
  • Free pick-up for cash and cheques to be deposited as well as home delivery of cash withdrawals
  • No charges for cheque return or stop payment or signature verifications
  • Especially dedicated relationship managers who keep on calling customers phone or cell to sell mutual fund, insurance or gold even when it is made amply clear not to pestered or reminded
  • Differently designed and coloured cheque leaves distinguishing them from the other customers

The hard truth is that most of the ultra-high networth individuals (HNIs) are too rich to hardly pay any visit to the private bank branches; perhaps many may not even be aware of the exact location!  Unless and until one frequently visits the bank on puts through physical transactions they have very little to gain in their privilege status. Most of them being tech-savvy do carry out most of their transactions online through internet banking or have staff to do their running about.

These privileged or private banking customers do not require or avail of the kaal-ka-baccha bank relationship mangers, parroting blah-blahs claiming to be ‘investment advisors.’ that they are not. These marketing gimmicks only serve to massage the egos of the few super rich customers. Most have on their own retainer highly qualified financial planners and advisors.

There was a time when elders/senior citizens were beneficiaries of additional +1% in interest on FDs, it now stands reduced to a mere +0.5%. This ought to be restored by extending it to all deposits – FD and recurring deposits too. The bulk deposits discretionary higher rate cap also should be restored to the earlier Rs15 lakhs from the now increased Rs1 crore. 

Common sense demands, on the contrary, that the benefits ought to have been first and foremost extended to the lakhs of small customers, the elders, widows, pensioners and housewives who have been loyally maintaining dedicated accounts with just one bank branch for decades at a stretch.   These savings accounts aggregating to crores constitute over 14.5% of the total low interest bearing deposits that the banks earn fabulously by advancing to borrowers at higher rates. Denying them the benefits is patently discriminatory.

(Nagesh Kini is a Mumbai-based chartered accountant turned activist.)

4 weeks ago
Have only relationship manager, no use of that..... Not even helping to reverse the late fee for credit card after paying the full payment within 3 to 4 days......
Yerram Raju Behara
9 years ago
Privy purses gone but the privileged class remains. Banks are more system centric than customer centric. The privileges that the author narrated are for those who transact through net for as is made out and confirmed by the users that these privileged class of customers hardly have time to visit the bank branch. There is a rush for CASA deposits as the banks are forced to compete with other financial products when it comes to FDs.
Excepting the reduced 0.5% additional interest on FDs, the senior citizens have no seniority anywhere in treatment. Earlier, there used to be a lounge where after presenting his/her token he/she can sit and browse through news papers or magazines until his/her turn comes. Now he has to wait in the que. A few empathisers now and then extend the privilege to the senior citizens.
9 years ago
Most of the bank customers who are opting these Privileged accounts are feeling status symbol of having a priority or patina or privilege account. They do have separate counters / lobby / relationship managers there by special care is being taken care. However opting for other facilities is not to the full extent
Deepak Sholapurkar
9 years ago
Good Article, "Privileged Customer" is a synonym for selling the waste products like ULIP's etc through there RM's.

When ever I asked about required things like Lockers RM's never replied but they were always there to call and try to sell Insurance/investment products.
9 years ago
Sometimes I feel that the banks intentionally bracket customers so that their RM's get a Ready bunch of customers whom they can target .. for selling their Schemes & products which are beneficial for the banks & the RM's Annual bonuses
9 years ago
Awesome article. My blood boils whenever i visit airports and see Jet Airlines operating many booths for their "privileged" customers while there are only a few check-in counters with long queues, for us lesser mortals.

They should have some decency and take over some of the common public passengers in times of heavy traffic. We will understand if any "privilege" customer comes and he is taken to the front of the queue.
nagesh kini
Replied to bhaskar comment 9 years ago
Bhasker - what's your take on Shashi Tharoor "Cattle class" remark for the Economy Class flyers?
The Executive and First Class are only there for the moneyed CIPs Commercially Important Persons and netas and top babus!
Mrinal Thakkar
Replied to bhaskar comment 9 years ago

In my opinion , the privilege system in Banking works in a completely diffrent way than the one in Airlines.

Airlines have privilege counters for their loyal customers who repeatedly fly on the same airline. In this case , we can also opine why Jet Airways allows Economy "Privilege" Card passengers to check in at Business class counters,isn't this a disadvantage for the people who pay nearly 5 times more to travel on Business/First Class.

In banking however, the Bank and its products are same across the board , the only diffrentiation being the AQB/AMB that customers maintain. the POV in the article in that why are the loyal people of the Bank(who have lower AQB/AMB) being suffered because some wealthy HNI walks in(who may not even use services) and RMs want their money at any cost.

i myself being a priority customer know how pushy these RMs are...these people sell FMPs to senior citizen(in this case my uncle) at 9.66% estimate whereas a PSU gives him 9.75%p.a on an FD. i mean whats the point taking the risk
9 years ago
Dear nagesh,

You have hit the nail on the head by your well researched article on these " Priority customers ". Being one myself, I hardly visit the branch and generlly my assistants go to the branch whenever required though it is quite seldom . most of the work is done online now adays ...
Mrinal Thakkar
9 years ago
On the Dot Article
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