What Can RBI Do?

Consumer Voice - - Customer Service By Banks -

The Re­serve Bank of In­dia should give a wake-up call to all banks to have them relook at the en­tire gamut of ser­vice charges – to bring in more trans­parency and stan­dard­iza­tion of charge­able items and also state them in sim­ple lan­guage for cus­tomers to un­der­stand clearly what they have to pay for avail­ing such ser­vices.

Dur­ing our study, we found that what one bank de­scribed as ‘charges for not min­i­mum bal­ance’, another put it un­der ‘charges for not main­tain­ing quar­terly av­er­age bal­ance’. Sim­i­larly, one bank’s ‘charge on ad­di­tion/dele­tion of name’ be­comes ‘charge for chang­ing op­er­a­tional in­struc­tions’ for another (ad­di­tion/dele­tion will in­volve chang­ing op­er­a­tional in­struc­tions of the ac­coun­tholder). This is what RBI says in its RBI Master Cir­cu­lar dated 1 July 2014, un­der ‘Levy of ser­vice charges – fix­ing ser­vice charges by banks’: The prac­tice of In­dian Banks' As­so­ci­a­tion (IBA) fix­ing the bench­mark ser­vice charges on be­half of mem­ber banks has been done away with and the de­ci­sion to pre­scribe ser­vice charges has been left to in­di­vid­ual banks. While fix­ing ser­vice charges for var­i­ous types of ser­vices like charges for cheque col­lec­tion, etc., banks should en­sure that the charges are rea­son­able and are not out of line with the av­er­age cost of pro­vid­ing these ser­vices. Banks should also take care to en­sure that cus­tomers with low vol­ume of ac­tiv­i­ties are not pe­nal­ized. Banks should make ar­range­ments for work­ing out charges with prior ap­proval of their Boards of Di­rec­tors as rec­om­mended above and op­er­a­tional­ize them in their branches as early as pos­si­ble. On ‘En­sur­ing rea­son­able­ness of bank charges’: In or­der to en­sure fair prac­tices in bank­ing ser­vices, Re­serve Bank of In­dia had con­sti­tuted a Work­ing Group to for­mu­late a scheme for en­sur­ing rea­son­able­ness of bank charges and to in­cor­po­rate the same in the Fair Prac­tices Code, the com­pli­ance of which would be mon­i­tored by the Bank­ing Codes and Stan­dards Board of In­dia (BCSBI). Based on the rec­om­men­da­tions of the Group, ac­tion is re­quired to be taken by banks.

What Do Bank Cus­tomers Say? One thing is clear. In the view of the ma­jor­ity, banks are not trans­par­ent in their ser­vice-charge port­fo­lio and may even be charg­ing cus­tomers ex­or­bi­tantly.

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