Enough of KYC – What about KYB, Know-Your-Banker?
No, I am not going to rant about the incessant, and probably largely unnecessary, demands for repeated verification of know-your-customer (KYC) that banks demand from us. 
 
Many of us have faced the same irritation year in and year out. 
 
You have maintained your modest account at your nearby bank for years. You have stayed in the same house, had the same permanent account number (PAN) card, the same Aadhaar number and the same passport (except for a renewal once in 10 years). 
 
Yet, the bank keeps insisting that you submit the same old documents year after year to satisfy the requirement of KYC verification.
 
What does this achieve, I would like to know? 
 
What nefarious ‘money laundering’ or ‘identity theft’ is the ordinary depositor conniving at? 
 
Perhaps KYC is, indeed, necessary for a few, but the vast majority is hassled, and administrative effort is wasted, in this futile exercise. 
 
Yet, the real money-launderers and identity thieves are, I suspect, happily going about their illegal ways.
 
How about some KYB – know your banker – instead?
 
In the good old days, one did know one’s banker. 
 
The friendly, or perhaps not-so-friendly, faces behind the cash counter, the savings and fixed deposit (FD) clerks, the dour-faced manager in his little glass box – all of them you knew quite well, and they knew you too. 
 
Anything that you wanted, and complaints that you might have had, were handled by these people. 
 
Yes, there was a ‘head office’ in some distant realm, but you had nothing to do with it. 
 
Things are very different today. Hardly anything gets done at the branch level. 
 
Everything is ‘processed’ at some far-off operations hub, every document that you submit is examined by some faceless person in ‘compliance’, every complaint that you have goes to some ‘grievance’ cell. 
 
You can never get to talk to, let alone meet, any of these nameless powers.
 
If you are not happy with what the bank has done to you, the branch people say “Sorry, so-and-so does this, we cannot do anything.”
 
Then what do the branch people do? They sell.
 
In my early days in banking, ‘sales’ was an unknown word. 
 
Bankers provided service, and even went out of the way, or bent some rule, to satisfy the customer. 
 
If service was great, the customer was happy and gave everything to this bank. He would not even think of another bank. 
 
In fact, he would even recommend the bank to his friends and neighbours. In short, service generated sales.
 
Today, service is left to machines, and humans only sell. 
 
There is a sales team in every branch with hefty targets, and the branch operations staff also have targets. 
 
Often these two groups, and individuals within them as well, compete for the same customer. 
 
Some central entity within the bank generates ‘leads’, or lists prospective customers. These are garnered by combing every sort of database that can be found, by fair means or foul—club member lists, voter lists, car and bike owner information, online sales data, you name it. 
 
These leads are fed to the branches and sales teams.
 
Ok, let me be kind.
 
At least these salespeople are bank employees. You may not know them, but the bank does. But the banks use many other salespeople whom even the bank itself does not know.
 
Look at the recent article on ‘Doorstep Banking’ in Moneylife. It is horrifying. Banks have come together to launch this sordid scam. 
 
They have engaged so-called information technology (IT) companies with no pedigree, whose ownership travels up through layers and layers of entities until it reaches some dubious companies from abroad. 
 
These IT companies have hired ‘representatives’ whose antecedents are unknown (to the bank, at least), credentials are dubious, and skills are untested. Only their motive is clear—earn money.
 
These sales representatives are going door-to-door in countless villages meeting gullible villagers, claiming to be from XYZ bank, and obtaining God-knows-what information (biometrics, signatures, perhaps even passwords) and putting it into a huge database.
 
And who controls that database? Indians or outsiders? How naive can the banks be? 
 
Here they are, hounding innocent customers for useless repetitions of information, just to tick the ‘KYC completed’ box, and they themselves are sending out totally unknown people who pose as bankers and get valuable data. 
 
And this data is reaching the ‘bad’ guys! 
 
This whole business of ‘outsourcing’ people started when the retail banking boom reached India. 
 
Citibank started it. 
 
As Jerry Rao (CEO-Citibank) once told me “I don’t have branches. I don’t even have big banking halls. How do I reach customers, and how do I service them?” 
 
Good questions, and he found the right answers—a hired sales force and automation.
 
The rest is history.
 
What can we expect, nay demand, from banks?
 
Our right to Know-Your-Banker (KYB)!
 
The public must be assured that:
 
- Anyone who contacts us claiming to be 'from XYZ' bank, must be a bank employee whose antecedents are known to the bank.
 
- If the person is not a bank employee, but an out-sourced agent, he must produce an ID card issued by the bank, which confirms that the bank has done a full investigation on the person and has full confidence in his honesty and integrity, and that the bank is fully responsible for the outcome of any interaction the public has with this person.
 
- Banks do a proper ‘due diligence’ into the details of every company that operates as its outsourced agent to ensure that its ownership is clean, its employees are vetted before hiring, and that the customer’s data is secure.
 
Is this too much to ask?
 
After all, if a bank chooses to be lax about outsourcing stuff like housekeeping and security to nondescript outfits, that is fine with me – it’s the bank’s problem if anything goes wrong. But if I am to deal with someone regarding my hard-earned money, I am entitled to be sure that the person is trustworthy. Am I not?
 
And where is good old Reserve Bank of India (RBI), the ultimate goalkeeper of our interests, in all this? 
 
Banks keep telling us “KYC is an RBI requirement; we have to do it.” 
 
Well, then, it’s about time that RBI wakes up to the customer’s genuine requirement, and, indeed, his right, to have confidence when dealing with a bank’s ‘agent’.
Bottom line – we give you KYC, now give us KYB. 
 
NOTE: If you believe that banks simply cannot be empowered with such extreme powers, please sign and share this online petition started by Moneylife Foundation.
 
The Foundation also urge you to write to [email protected] with details if you have suffered due to unfair freezing of your account. We will add the information to the case studies we have collated.
 
 (Deserting engineering after a year in a factory, Amitabha Banerjee did an MBA in the US and returned to India. Choosing work-to-live over live-to-work, he joined banking and worked for various banks in India and the Middle East. Post retirement, he returned to his hometown Kolkata and is now spending his golden years travelling the world (until Covid, that is), playing bridge, befriending Netflix & Prime Video and writing in his wife’s travel blog.)
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    COMMENTS

    Gupta10

    2 weeks ago

    Very well written. I recently had to update my address with 2 leading banks where I had an account. First bank took 3 months to do the job, that too after I got fed up of the nameless compliance team rejecting my docs by literally giving a reason "." Yes, a full stop was the reason sent to me by email in a standard templated email. The branch guys were busy selling, not interested in solving the problem till I wrote to the head of their business in Mumbai. The 2nd bank took 4 months to do the same job. First they nitpicked on how I filled the form - it was rejected because there was an extra comma I put in the form in the address which wasn't there in the address proof!! After all that, they asked me to countersign at every damn place possible even if there was no overwriting and I finally did it just to get things done. Finally after 4 months when my address was updated, I checked online to find the scanned copy of my form. Using those countersigns, the bank had completed changed my entire address (filled up my overseas address and struck out the India address I had given), and they neither sought my consent nor did they bother to inform. Worst thing, the address they updated was littered with errors (and didn't match with my form or address proof) to the point that DHL could not even deliver to me and had to call me to confirm my address. But yes, when a customer does it, even a comma mismatch is a money laundering crime.

    Premkumar R

    2 weeks ago

    Excellent article.

    Kamal Garg

    3 weeks ago

    Perfectly agreed. Instead of KYC, it should now be KYB. Perfectly agreed that these front line people who 'man' the services counters at banks which you call as 'clerks', and the quintessential dour-faced manager in his little glass box are the most horrible experiences, a person can have, apart from that non-existent 'head office' which is the first and last tactic used by these clerks/managers to endlessly harass you.

    suketu

    3 weeks ago

    Love this article.There are bankers of private banks who boast to clients they go to one Casino Royal place in Goa to "invest" their money!And customers like us are totally unimpressed with such people and left their bank.

    cvsubramaniancv

    3 weeks ago

    Presently it is not "Know Your Banker"
    It is "No UR(L) to Banker"

    sha79

    3 weeks ago

    Great article sir. Unfortunately only Moneylife highlights the wrong doings of banks and most media outlets avoid these type of stories, for fear of losing advertisement revenue.

    It is a farce to have RBI, a central reserve bank, manage the day to day activities of banks. The RBI does not have a system of grievance resolution, nor does it formulate simple and easy to understand rules. The RBI makes up rules and circulars as things happen.

    Bank managers can do anything today under the guise of "RBI rules" and there is no way to find out if this is actually the case.

    The need of the hour is to have a dedicated bank regulator that sets the rules and resolves account holder's complaints.

    SenSage

    3 weeks ago

    As an Investment Advisor I refer my clients to a private bank for opening banking account as a one-point contact for servicing them.

    I have opened more than 100 accounts and debit freeze for re-KYC is used as a tool to market insurance products by providing a relief for debit freeze and then pushing third party product.

    At times the routine call for renewed visa page is not by sending a message or email but by freezing the debits.

    kpushkar

    3 weeks ago

    We are not a big enough vote bank neither note bank.. who can donate to politicians ..

    Nahom

    3 weeks ago

    Bankster's criminality starts from Wall Street Banks and spreads it's tentacles all over the World. In India it mixes with Idiosyncrasies of Bureaucracy.
    Ultimate aim to loot savers anywhere in the World.

    Amitabha Banerjee

    3 weeks ago

    Thanks, Mr Suresh. Unethical behaviour and lack of transparency in banks are burning issues which Moneylife (articles by Ms Sucheta Dalal) has been constantly raising, but alas, as you have observed - authorities do not seem to care.

    sureshtb4246

    3 weeks ago

    When criminal breach of trust is brought to the notice of Chairman, RBI (regulator), finance minister, ministry, at branch level, (forgery, fraud, cheating etc), NO ONE ACTS
    THE BRANCH WILL GIVE YOU LETTER, STATING, THEY HAVE BEEN ALLOWED TO DO, WHEN IN REALITY THERE IS NO SUCH PERMISSION - WITH SUPPORT FROM BANKING OMBUDSMAN.

    We are listening!

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