In the true spirit of what Dr KC Chakrabarty had said, we can only hope that he will continue to champion the cause of bank customers to achieve his unfinished agenda of fostering more competition, more efficiency and more customer orientation for providing a fair deal to the hapless, voiceless and powerless customers

Dr KC Chakrabarty, deputy governor of Reserve Bank of India (RBI) had a touching message for his banking fraternity before he laid down his office last week. When a reputed news channel asked him last week for his parting message, he said: “Banks in our country should be more efficient, more competitive and more customer- oriented”. These three dictums from the doyen of banking of Mint Street not only brings out what is lacking in our commercial banks, but more importantly exemplifies the nature of a man, who was committed to improve the lot of bank customers during his short tenure of five years in the Reserve Bank.

Dr Kamlesh Chandra (KC) Chakrabarty took over as deputy governor of RBI on the15 June 2009 after an illustrious career in banking spanning over three decades. He was the chief executive of UK operations at Bank of Baroda before being elevated as executive director of Punjab National Bank (PNB) in 2004. Subsequently he headed two of the public sector banks, namely Indian Bank and Punjab National Bank as chairman and managing director (CMD) for two years each and was catapulted to the position of a central banker, a position he served with dedication for nearly five years. Though he was due to retire at the end of June 2014, he opted to vacate his position a few months earlier, for reasons unknown, though he vehemently denied any differences with his immediate boss, Dr Raghuram Rajan, the governor of RBI.

In fact in an unusual gesture, RBI issued a brief press release reading as under on 21st March, 2014, eulogizing the services of Dr Chakrabarty.

The Reserve Bank is very grateful for his many years of excellent work in very difficult times. Dr Chakrabarty always speaks his mind, and has been a very valuable guide for successive governors. In recent years, Dr Chakrabarty has spearheaded the Reserve Bank’s move towards risk-based supervision. His experience as a banker has given him the ability to diagnose weaknesses in the system, and made him a forceful advocate for change. "I personally have benefited enormously from his advice", Governor Dr Raghuram Rajan said.”

However, Dr Chakrabarty’s tenure was not without controversies. In August 2010, he was stripped of certain of his portfolios for his alleged remarks that the central bank needed to be more aggressive in reining inflation, soon after the announcement of the monetary policy then. This, no doubt, created a few ripples in the media, but Dr Chakrabarty took all this in his stride and went on with his job with a single minded devotion of making banking services accessible to the common man in our country. Last week, when reminded of this episode by a news channel, he candidly said that it turned out to be a great favour to him because the entire world came to know that his views were different from RBI’s views and that helped him to keep his reputation intact.

Read: Reserve Bank intrigues: Was KC Chakrabarty set up?

Customers should demand better service from banks:

Moneylife Foundation had the honour of having Dr Chakrabarty as the chief guest for its first anniversary function held on 5 February 2011. Speaking at the function, he said: “A bank is bound to give proper service, and people have to demand it from them. Do not patronize 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 had said.

“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.

Read: Dr KC Chakrabarty says customers should demand better service from banks

Open House programme of Moneylife with Dr Chakrabarty:

At the open house programme organized by Moneylife Foundation on 3 June 2013 in Mumbai, Dr Chakrabarty had said, “Customer service in banking is not negotiable, but customers must be aware about their rights.

“Customer is the most important part of a banking system and it is necessary that the bankers do not ‘squeeze’ customers. However, we must understand that banking is not just a service but it is also a business and banks need to levy charges on services in order to survive”, Dr Chakrabarty had said.

Dr. Chakrabarty also openly agreed with Moneylife Foundation’s stance that banks should not sell non-banking products like wealth management services, insurance and gold."My view is that banks should not be selling third party products. In fact, life insurance has been in India since independence, but till 1994-95 there were no banks selling insurance or mutual fund products. I fully support that the regulator must decide what is mis-selling. It must decide that if the bank is selling insurance products, what should be the conditions required to be fulfilled” he said.

Charging for withdrawing your own money through ATMs is ridiculous:

Recently, when the Indian Banks' Association (IBA) demanded that banks be allowed to increase user fees and limit free access to ATMs, Dr Chakrabarty was first to react vehemently against any such move.

Speaking to ET NOW, Dr. Chakrabarty said "it is very, very ridiculous that banks are charging the customers for withdrawing money, and that too from their own ATMs -- it never happens anywhere." He went on to add that this is something that only further competition in the industry can rectify.

"If the cost of withdrawing money is so high so that they are charging you, then they may just start charging you even if you go to a bank branch. That is why I feel we require more banks, there is not enough competition and banks are becoming illogical," said Dr Chakrabarty.

He was a staunch proponent of competition in banking industry. He had said: “It is only when the dominant players in any business segment start to compete against each other that the consumer truly benefits in terms of prices and quality of service. This sadly is not the case in our banking sector. In my opinion, the bigger and stronger players would not be averse to competition as the new banks are not likely to threaten their position at least in the medium term”.

Financial Inclusion was close to his heart:

Speaking at the Annual Banking Conference organized by Mint in January this year, Dr Chakrabarty had said: “The customer has to be the king and the banks have to shift their attention away from the exclusive club of corporates and high net-worth individuals (HNIs) to those who still fear to tread through the bank’s glass doors and feel hesitant to sit on its sofas or approach the counters. Bankers should serve them with a smile and leave them with a feeling that they are as welcome and exclusive as any other and also that the banks can understand their needs and offer them “structured products” as per their requirements. Suffice to say that ‘Inclusion’ agenda will dominate the new landscape of the Indian banking in the coming days.”

He further asked the bankers assembled: “Have there been any efforts to provide suitable banking products to those whose access to finance is restricted? Are there products that can meet the needs of a street hawker or the seasonal needs of an agrarian labourer? Why have our efforts at financial inclusion been so supply-driven and not demand-led? As I mentioned earlier, eliminating financial exclusion in all its manifestations would have to be one of the underlying missions for the banks.” A great message so succinctly put across by none other than Dr.Chakrabarty to the large gathering of bankers.

Pro-consumer stand of Dr Chakrabarty:

Sucheta Dalal, managing editor of Moneylife and founder-trustee of Moneylife Foundation, writing about pro-consumer stand of Dr Chakrabarty, had this to say:

Dr Chakrabarty often said that it took him several years to have some obvious pro-customer decisions implemented. One of these was to bar the pre-payment penalty that banks impose on home loan borrowers, to prevent them from switching to other borrowers. Since banks discriminated against existing borrowers by offering lower interest to new customers, the scrapping of foreclosure charges levelled the playing field for customers. He also stopped banks lending below their base rate and, more recently, from fooling customers with fake zero-interest loan offers during festivals.”

“Dr Chakrabarty has also been most vocal about mis-selling of third-party financial products by banks but was unable to stop it during his tenure. However, to Dr Chakrabarty goes the credit for ensuring one of the biggest ever payments by a foreign bank to actor-singer Suchitra Krishnamoorthi in a case of mis-selling. Despite resistance at various levels in the central bank, inaction by the insurance regulator and part-action by the capital market regulator, it is to his credit that HongKong & Shanghai Banking Corporation (HSBC) was forced to make a settlement.”

Read: Targeting Dr KC Chakrabarty

Conclusion:

Such is the multifaceted personality of Dr Chakrabarty, who never shirked his responsibility to the banking public, though there were several obstacles in his path to achieve his objectives. Now that he has laid down his office, here is wishing him all the best in the future. He had said in one of his speeches thus: “I see the tectonic shifts occurring in the banking space ahead. I cannot afford to rest. As they say, age wrinkles the body, quitting wrinkles the soul. So I can go on and on €..” In the true spirit of what he had said, we can only hope that he will continue to champion the cause of banks’ customers to achieve his unfinished agenda of fostering more competition, more efficiency and more customer orientation in the banking industry in the larger interest of getting a fair deal for the hapless, voiceless and powerless banking public of our country.

(The author is banking analyst and he writes for Moneylife under the pen name ‘Gurpur’)