Financial Daily from THE HINDU group of publications
Monday, Oct 18, 2004
Money & Banking
Columns - Errors & Omissions Expected
Banks are `too sophisticated' for the common man
AN angry reader has sent in a fuming mail that his bank is not giving `good service'. If you are among the many who think that getting service from banks is itself tough, the word `good' may appear to be redundant. But first, let me ask my friend what his grievance is.
It seems he went to deposit a cheque in his account, and there was nobody to accept the same. "They must have gone for one more coffee, or chatting about kolu," I postulated. He says, "No, they asked me to drop it in a box!"
A collection box, that is, though I guess there could be some trash too when somebody clears it at the end of the day. My friend doesn't want to be boxed in by the box: "No, I need the counterfoil duly stamped and initialled by the clerk as visible evidence of my having deposited. Immediately."
I understand his anxiety, and so look at www.rbi.org.in to check out. "Boxes for depositing cheques for collection and clearing should be provided at larger offices," says the RBI.
"The boxes should be cleared at regular intervals and receipted counter-foils placed at a convenient place for customer to collect. This should be in addition to the regular collection counter." The key phrase is `in addition to'.
Going by the RBI advice, if there was nobody to collect the cheques in the first place, I don't think there would be anybody to dole out the counterfoils to customers who care to return to the bank.
So, in all probability, these slips would be put in a shoebox and kept in a corner, which means you can rummage them to find out how much money has gone into whose account.
While the drop box concept may have been imported from the West or borrowed from the common practice of installing daan-peti or hundial in temples, there is a security vulnerability that appears to have been overlooked.
What prevents a vandal from tossing into the box a live cigarette butt and let the cheques be burnt, and customers face the brunt?
Report No. 3 of the Committee on Procedure and Performance Audit on Public Services (CPPAPS), a.k.a. the Tarapore Committee, deals with `Banking Operations: Deposit Accounts and Other Facilities Relating to Individuals (Non-Business)'.
One of its recommendations is about the problem box: "The Committee is of the view that both the drop box facility and the facility for acknowledgement of the cheques at the regular collection counters should be available to customers."
It adds that no branch should refuse to give an acknowledgement if the customer goes to the concerned counter for such an acknowledgement.
Some out-of-the-box thinking, isn't it?
There are interesting statistics in the report: There are 141 million term deposit accounts. In the case of individuals, over 61 per cent of these accounts are of deposit size below Rs 25,000; and only less than six per cent of term deposits are of a size above Rs 1 lakh.
There are 289 million savings bank accounts in scheduled commercial banks. "Assuming an average family size of four, on average, every family has a savings bank account."
Now, some hard talk about the system: "The interests of the mass of depositors are just not taken into account when formulating the complex regulatory framework."
Banking framework is "far too sophisticated" and so "virtually irrelevant" for the common man. On `various vital areas' you would find silence from the banking system and so "there is a vacuum when it comes to providing authentic information to the depositor."
A quote from M.R. Pai, cited in the report is bang on truth: "The biggest asset on the balance sheets of banks today is the ignorance of customers of their own rights, and their reluctance to fight for them." A different NPA: non-performing awareness?
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